BOISE — Federal regulators are accusing an Idaho businessman of conning at least $40 million from investors and using the money to make credit card payments, pay for snowmobiles and a mansion in Idaho Falls.
The Securities and Exchange Commission filed the lawsuit against Daren Palmer and Trigon Group Inc. on Thursday in U.S. District Court in Boise. The commission said in a statement that the court signed an order freezing his assets and appointing a receiver for the company.
Idaho’s Department of Finance has already issued a cease-and-desist order to the Idaho Falls investment firm, which is under investigation for what state and federal officials are calling a classic Ponzi scheme.
That’s the same kind of fraud that New York money manager Bernard Madoff is also suspected of running, in which money from new investors is used to pay off earlier investors. The scheme falls apart when clients start trying to pull their money out and there aren’t enough new investors to provide funds.
Palmer, 40, is president and sole owner of the Trigon Group, a Nevada corporation that is headquartered in Idaho Falls. The SEC filed a civil lawsuit against Palmer saying he defrauded at least 55 investors by promising high returns through an allegedly riskless trading program.
The complaint says Palmer sold securities in the form of promissory notes and investment contracts between 1996 and October 2008 to clients, including friends and neighbors in his eastern Idaho community.
Palmer told his clients he had learned a complex strategy for investing in a way that generated annual returns of 20 percent or greater regardless of how the stock market performed, the lawsuit says.
Palmer prepared and provided investors with quarterly statements bolstered by false profits and used the money generated from their investments to pay fictitious returns to previous investors.
The complaint further alleges that Palmer used investor funds to build a partially completed $12 million home in eastern Idaho and paid himself a salary of $25,000 to $35,000 a month.
Palmer also told investors he was licensed to sell securities, which is not true, the SEC said.