SEC Charges Pennsylvania Man With Helming $770 Million ATM Ponzi Scheme
The U.S. Securities and Exchange Commission has charged a Pennsylvania man, Daryl F. Heller, and his two companies, Prestige Investment Group LLC and Paramount Management Group LLC, with operating a massive Ponzi scheme that defrauded approximately 2,700 retail investors out of an estimated $400 million.
According to the SEC’s complaint, filed in the U.S. District Court for the Eastern District of Pennsylvania, Heller – now age 55 – and Prestige raised more than $770 million from investors from January 2017 through June 2024. Investors were told their money would be used to purchase and operate ATMs through a nationwide network managed by Paramount. Heller allegedly promised consistent and significant returns, claiming investors would receive approximately 25% from the income generated by ATM transaction fees and related charges.
In reality, the SEC alleges the operation was a fraudulent scheme. The ATM network was not nearly as profitable as promised, and investor distributions were primarily funded by new investor money and high-interest, short-term loans. The complaint claims that only a fraction of the funds raised were used to purchase ATMs, with many of the machines being old and left in disrepair.
“Heller allegedly exploited his connections to his community and deceived retail investors into thinking the ATM investments were safe and reliable, when in reality he used only a fraction of investor funds to buy ATMs and misappropriated $185 million,” said Scott A. Thompson, associate director of enforcement in SEC’s Philadelphia office.
The complaint further details that Heller personally misappropriated over $185 million of investor funds for his own use, including personal expenses such as a beach house on the New Jersey shore, and to finance other businesses he owned – such as in cannabis, cryptocurrency, technology, financial services, and a restaurant. Also, Heller used $3.8 million for personal tax payments.
The scheme began to unravel in early 2024 as new investments slowed, leading to a halt in payments to existing investors and revealing losses that had been concealed for years. According to the complaint, Heller provided investors with false and misleading excuses for the failure to pay distributions, including the cost of compliance with required ATM upgrades, Paramount’s purported acquisition of a large ATM portfolio resulting in short-term cash flow issues, and a potential buyout of investors by an unnamed private equity firm.
The SEC’s complaint, filed in U.S. District Court for the Eastern District of Pennsylvania, charges Heller, Prestige, and Paramount with violations of the antifraud provisions of the federal securities laws. In a parallel action, the U.S. Attorney’s Office for the Eastern District of Pennsylvania has also announced criminal charges against Heller.
The SEC’s complaint seeks a permanent injunction, disgorgement of all ill-gotten gains with prejudgment interest, and civil penalties against the defendants. It also seeks to bar Heller from serving as an officer or director of a public company in the future.
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