Feds: Millions of dollars missing after Ponzi scheme collapses

A Denver man convinced investors to give him tens of millions of dollars for his cattle trading and marijuana businesses, luring them with promises of steep returns.

The problem? Mark Ray owned almost no cattle. And his wholesale, state-licensed marijuana business was deeply in debt, according to settlement documents filed Monday in U.S. District Court in Colorado.

Instead, Ray for years funneled the millions to pay off prior investors and to line his own pockets, including paying for medical bills, private flights and his own herd of show cattle, the documents said.

Ray agreed to settle with the U.S. Securities and Exchange Commission to end the agency’s fraud investigation, according to the documents filed by the commission. The scheme began in 2014 and collapsed in March, causing investors to lose millions of dollars. Ray consented to having his assets frozen and to allow the commission to decide how to take back Ray’s profits, court documents said, but did not admit to any wrongdoing in his settlement.

More than $140 million per month was being moved through the accounts of Ray and others involved at the height of the ploy.

The marijuana business, called Universal Herbs, is deeply in debt, according to the documents. And while Ray sent detailed descriptions of the cattle and feedlots he was involved with to investors, the particulars were mostly lies.

“In other words, there were, in fact, no cattle to support the vast majority of purported investments in cattle trading,” according to the complaint. “Instead, Ray simply used new investor money to repay prior investors.”

The state of Illinois in 2005 barred Ray from selling securities there after a similar scheme involving cattle trading.

A grand jury in Texas indicted Ray on two felonies in March 2018 for allegedly stealing more than $30,000 as part of a fraudulent cattle sale.