Risk & Compliance

Texas Man Accused of $114M Ponzi Scheme

The accused sold one-year notes on the promise that investor monies would fund the research and development activities of various public companies.
Matthew HellerAugust 4, 2015

The U.S. Securities and Exchange Commission has charged a Houston-area businessman with operating a $114 million Ponzi scheme in which he promised annual returns of as much as 42% to victims who invested in a technology to prevent accidents caused by drowsy drivers.

Frederick A. Voight, 58, raised $13.8 million for the Driver Alertness Detection System (DADS) technology through an offering of promissory notes even though he knew the company developing it, InterCore, was financially troubled and had no means to pay back the loans, the SEC said in an enforcement action filed Monday.

According to regulators, Voight used $8.6 million of the proceeds to pay investors in previous fraudulent promissory note offerings and secretly funneled another $4.7 million to InterCore and its IRC subsidiary. He resigned as a director of InterCore and its vice president of investments in June.

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“Voight wooed investors with promises of outsized returns and once-in-a-lifetime investment opportunities,” David L. Peavler, acting regional co-director of the SEC’s Fort Worth regional office, said in a news release. “But, like all Ponzi schemes, we allege that this one collapsed when Voight couldn’t find enough new money to keep up with his false promises.”

As part of a settlement of the charges, Voight and his DayStar Funding LP firm agreed to pay civil penalties and return alleged illegal gains in amounts to be determined by a federal judge. He neither admitted nor denied any wrongdoing.

“Mr. Voight is looking forward to having all the facts come out and putting this matter behind him as soon as possible,” Brent Baker, a lawyer for Voight, told Reuters.

According to an online biography, Voight has more than 25 years of experience in managing both public and private company investments. But the SEC said he began operating the Ponzi scheme in 2004, raising at least $114.1 million from approximately 300 investors through DayStar and F.A. Voight & Associates.

All sums paid to investors “were merely Ponzi payments derived entirely from the funds of new inevstors,” the SEC said, and the DADS offering “was simply the latest phase in Voight’s longstanding Ponzi scheme.”