A man who sold securities to at least 78 Colorado residents for more than $13 million allegedly used that money to pay for a lavish personal lifestyle rather than investing the money as he had promised.
Denver District Court Judge Eric Eliff granted an order of preliminary injunction against Joseph David Ryan and his companies, collectively known as Madyson Investments, after Securities Commissioner Gerald Rome filed a complaint alleging the defendant committed securities fraud.
“The court order says he must stop selling securities in Colorado,” Rome said. “His companies are out of business.”
Madyson Investments includes Madyson Capital Management LLC, Madyson Equity Group LP, Madyson Holdings Inc., Madyson Realty Fund I LLLP, and Madyson Realty Partners LLC, all located in Colorado Springs.
Judge Eliff appointed receiver John C. Smiley to immediately take over management of all assets controlled by the defendants.
“We’re happy the court agreed with our assessment that further damage to investors could occur if Ryan was left in charge,” Rome said. “The companies have assets that Ryan purchased with investors’ money. The receiver will liquidate those assets.”
Investors should get some of their money back, according to Rome, but the amount depends on how much Smiley can obtain for those assets.
The Division of Securities alleges that Ryan purchased a personal residence with investors’ money, as well as residences occupied by Ryan’s assistant and his wife, neither of whom paid rent. The complaint, according to a press release, also lists purchases of luxury vehicles and $10,000 worth of jewelry, as well as other luxury goods.
The preliminary injunction prohibits Ryan from destroying any records related to his businesses and freezes all of his assets. Ryan has been ordered to turn over information on all real estate property, accounts, books and records.
Rome said the case is ongoing.
“It should be set for trial in about a month,” he said. “We’ll let the legal process play out now.”
The Division of Securities alleges that Ryan was the sold control person of Madyson Investments and that he promoted the investments as being used to acquire residential and commercial properties to own and operate as rental properties. Many investors then redirected money from retirement accounts into Madyson Investments, allegedly based on promises of low risk and guaranteed profits.
The Division of Securities is represented by attorneys from the Colorado Attorney General’s Office.