Firm ordered to repay:
The Arizona Corporation Commission ordered three co-owners of LoanGo, a failed Chandler-based internet payday-loan company, to repay five investors who were defrauded of a combined $250,000.
The Arizona Corporation Commission on Monday ordered three co-owners of LoanGo, a failed Chandler-based internet payday-loan company, to repay five older investors who were defrauded of a combined $250,000.
The commission, in a 5-0 vote, also ordered LoanGo Chief Executive Jeff Peterson, former Valley insurance agent Justin Billingsley and businessman John Keith Ayers to pay fines of up to $15,000 each.
Peterson is a former Arizona-Mexico Commission member, major donor to Arizona Democratic candidates, and founder of Quepasa, a now-defunct Latino online social-media outlet.
The commission upheld the findings of its Securities Division and an administrative law judge who concluded the investors were defrauded after making investments in 2011 and 2012.
Regulators also found that Billingsley and LoanGo committed securities fraud by making misrepresentations to investors and failing to disclose key information. Peterson was accused of selling unregistered securities while not being a registered securities dealer. Ayers was named because of his ownership stake in the company.
The investors were snowbirds staying at the Desert Shadows RV Resort in Casa Grande, where they also attended
financial planning seminars, records show.
Peterson, who has denied the allegations, did not attend the hearing.
Ayers told the commission that he made a good-faith effort to make the company succeed, did not have access to bank accounts and how the company spent investors’ money, and had nothing to do with raising funds. He also noted that he cooperated with securities regulators.
He asked the commission to remove him from the order.
The commission, however, refused to do so.
Commissioner Andy Tobin, in responding to Ayers, noted that Ayers was the company president and a director who had the responsibility to protect investors’ funds. Ayers quickly left the hearing after the vote.
Tim Sabo and Don Bivens, newly hired attorneys for Billingsley, asked the commission to delay its ruling for a few months. The lawyers argued about the accuracy of the findings against Billingsley.
Commissioners, however, noted that the case has gone on since June 2015, and former attorneys for Billingsley had numerous opportunities to present a defense for him.
The three men can seek a rehearing or appeal to Maricopa County Superior Court. No decision was made on whether to appeal.
The order requires the men to pay restitution within 90 days. The commission can seek assistance from the Attorney General’s Office to obtain the money for investors.
Administrative Law Judge Scott M. Hesla on Oct. 10 noted that Billingsley failed to inform investors that their money would be used to repay business startup loans of $10,000 each to himself and Peterson. The judge also wrote that investors were not told Billingsley received a $15,000 commission for obtaining their investments.
The judge noted that Billingsley was repaid his startup loan the same day one person invested $45,000 in LoanGo, and that Peterson was repaid the same day a different person invested $25,000 in the company.
The judge wrote that “a reasonable investor would expect his or her investment to be used for the benefit of the company, not to repay obligations owed to the co-founders.”
Hesla added: “Failing to disclose that investor funds would be used to repay obligations owed to the company founders is significant and constitutes a material omission.”