in Web fraud
Regulators filed fraud charges Monday against a 20-year-old Kentucky man accused of scamming money from would-be investors by creating a Web site for a fictitious federal agency.
The Securities and Exchange Commission lawsuit, filed in U.S. District court in Tennessee, charged K.C. Smith with raising $102,554 through bogus Web sites and about 9 million e-mail messages. Smith even used the SEC's own seal to convince investors that the scheme was legitimate, according to the lawsuit.
Smith, of Oak Grove, Ky., didn't admit to or deny the allegations, but agreed to a settlement requiring him to return $107,510 of gains and interest, and barring future violations.
Regulators allege that between May 2002 and February 2003, Smith ran a Web site for Kryer Financial, a bogus investment company offering double-digit monthly returns said to be insured by the "United States Deposit Insurance Corporation," another entity he invented.
Smith created a Web site for the USDIC featuring the SEC's official seal and claimed that investments with Kryer Financial were fully insured against loss, the SEC said. The SEC said none of the money Smith raised was invested, and none of it was insured. Instead, regulators said Smith used the money to pay his living expenses.
Health care lender delays end
Dublin, Ohio-based National Century Financial Enterprises will keep operating for about a year as it tries to pay off creditors, delaying a plan to cease operations and sell what's left of the company early this year, company officials said.
The bankrupt health care lender had received two formal offers for its accounts receivable in recent months.
Creditors would be unlikely to approve any sale, said acting chief executive David Coles, a restructuring expert.
The company can recover about $600 million - still less than it owes its creditors - from the bankruptcies of its former customers and other sources, Coles said.
Before filing for federal Chapter 11 bankruptcy on Nov. 18, National Century was the nation's largest provider of financing to health-care providers, with 100 clients.
- Wire reports
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