Securities Law Blog

The Securities and Exchange Commission (SEC) filed a complaint on May 3, 2010 in the U.S. District Court for the Northern District of New York charging Matthew J. Ryan with operating a Ponzi scheme through his business entity based in Troy, New York. The SEC obtained a court order to freeze the assets of Ryan and his company, Prime Rate and Return LLC, also referred to as American Integrity.

Since at least 2002, the financial professional has raised over $6.5 million from investors mostly in their 60s and 70s, according to the SEC report. Ryan allegedly promised guaranteed fixed rates of return ranging from 3.85% to 9% annually. He allegedly attracted investors by using a phony Manhattan address and created names and titles of American Integrity employees, none of which ever existed. Ryan is the sole employee, founder and owner of Prime Rate and American Integrity.

According to the SEC complaint, he presented American Integrity as a “legitimate, substantial financial services firm with numerous employees and for which he was merely an employee offering safe, even guaranteed, investments, including qualified individual retirement accounts (IRAs).”

Ryan allegedly told investors that their investments were safe and insured by either the Federal Deposit Insurance Corporation (FDIC) or the Securities Investor Protection Corporation (SIPC).

The SEC also found that American Integrity is not even an entity at all, but simply a name on a bank account for which Ryan used to deposit all investor funds. Ryan allegedly used one bank account to hold funds, withdraw money when he needed to pay investors the returns he had promised and return principal amounts when investors withdrew.

Ryan’s alleged personal use of investor funds included paying real estate lenders on properties he and Prime Rate owned, covering personal expenses and purchasing luxury cars.

As of March 31, 2010, American Integrity owed investors at least $3.5 million, while it had less than $8500 in cash on hand, according to the SEC’s claim.

The SEC is charging Ryan with violating the antifraud provisions of the Securities Act and the Exchange Act, and illegally conducting an unregistered offering of securities.