Missouri Secretary of State Robin Carnahan issued a cease-and-desist against a St. Peters resident, his financial company and others last week.
Carnahan alleges that Michael Kitchen, his company PIF Financial Services, LLC, and others were involved in a "classic" high-yield investment program scam.
According to the cease-and-desist order, Kitchen is accused of accepting investment funds from at least five investors in a program he assured investors was risk-free and promised astronomical returns in as little as 30 days. The order says that loses in excess of $800,000 were racked up by the investors. One investor, an 80-year-old from St. Joseph, Mo., invested $100,000 in 2008 and has not received any return on investment or refund of investment funds.
“High-yield investment programs often turn out to be scams,” Carnahan said in a press release. “Promises of unbelievable returns, no risk and claims of being connected to financially sound institutions are a recipe for fraud.”
Carnahan alleges in Kitchen used investor funds in excess of $300,000 of for expenses unrelated to investments. Kitchen used the investor funds to purchase cars and pet supplies, to pay for rent, meals and entertainment and for cash withdrawals that appear to be unrelated to investments he offered.
Eventually investors and agents asked about delays in receiving the promised returns. The order says that Kitchen provided a letter that he said was from Bank of America that that show PIF had in excess of $800 million in an account. The letter indicated the money would be immediately available upon receipt of supposed “release codes” from the Securities and Exchange Commission. The letter, however, was not official. Bank of America told the securities division they had not issued the document.
The cease-and-desist order alleges that PIF, Kitchen, Daniel Hance, Dion Monroe and Shannon Ingram offered and sold unregistered securities, and PIF and Kitchen committed securities fraud by providing untrue information to investors and misleading investors as to how their funds would be spent. The order alleges that Garlanda Kitchen and Premier Mortgage Solutions, LLC, materially assisted these violations.
Respondents face up to $190,000 in penalties and costs and the possibility of paying restitution to harmed investors. The respondents have 30 days to request a hearing and contest this matter.