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Tucson Couple and their Company Admit to
Defrauding Investors
PHOENIX, AZ—The
Arizona Corporation Commission today ordered Tucson residents Michael and Betsy
Feinberg and their affiliated company, Catharon Software Corporation, to pay
$4,926,559 in restitution and a $250,000 administrative penalty for defrauding
investors with an unregistered investment program.
The
Commission found that the Feinbergs, formerly of Sedona, represented that they
had created and owned a patented computer language technology named “V∆Delta”
that would enable Catharon to compete with Microsoft and other computer language
systems manufacturers. While not registered to offer or sell securities in
Arizona, the Feinbergs induced investors
to purchase Catharon stock by repeatedly representing that Catharon would launch
its technology within months of the investors’ investment, Catharon would
generate $2 billion in revenue within
three years and investors would receive returns of between 400 and 1,572
percent. The Commission found, however, that the Feinbergs never launched
Catharon’s technology.
The Commission found, and the Feinbergs admitted, they
did not have any reasonable factual basis
for the projected launch dates, the projected $2 billion revenue figure and
investment returns, or their representations that Catharon would compete with
Microsoft and similar companies. Further, the Commission found that the
Feinbergs failed to disclose their use of investor monies to pay for personal
living expenses, including a bird-watching trip to Mexico, as well as the
transfer of more than $891,000 to their personal bank account.
In settling this matter, the Feinbergs admitted to the
Commission’s findings for the purposes of its administrative proceeding and any
other proceeding in which the Commission is a party and consented to the entry
of the consent order. For more details about this
case, view the full text of the
Commission’s order S-20905A-14-0061. The
Commission’s final order against the named respondents will be posted online as
soon as it is signed by all of the Commissioners. Please check the
website:
More caution for investors:
Even when selling a legitimate product, some promoters
do not recognize the investment program they have created is a security.
Determining whether an alternative investment program is a security is not
always easy to determine and depends upon the unique facts and circumstances of
the transaction and not on what a promoter calls the investment product. Even when investing with someone
they know, investors should verify the registration of sellers and investment
opportunities and investigate disciplinary histories by contacting the Arizona
Corporation Commission’s Securities Division at 602-542-4242 or toll free in
Arizona at 1-866-VERIFY-9 (837-4399). The Securities Division’s investor
education website also has helpful information at www.azinvestor.gov.
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Tuesday, February 3, 2015
Arizona Corporation Commission Halts Tucson $4.9 Million Investment Scam
