A Denver court has frozen the assets of an investment management firm in Colorado Springs and Henderson, Nev., amid allegations that the company and the CEO spent more than $13 million of investors' money on homes, vehicles, jewelry and other personal items.
Colorado Securities Commissioner Gerald Rome filed a lawsuit Monday in Denver District Court against Madyson Capital Management, four affiliated companies and Joseph David Ryan, Madyson's founder and CEO alleging they committed securities fraud, misled investors and used investor money to pay for "the extravagant lifestyle of Ryan, his friends and family," the lawsuit says. Ryan's girlfriend, Gabrielle DeMeo, who lives with Ryan in Las Vegas, and his assistant, Amanda Rose Rizarri of Henderson, Nev., also were named as defendants in the suit.
Denver District Judge Eric Eliff froze bank accounts, 13 properties owned by Madyson or Ryan in Colorado Springs and Nevada and other assets of the businesses and defendants and barred them from marketing or selling securities or accepting funds from investors pending a Nov. 9 court hearing in Denver.
The suit also seeks a permanent court order barring the defendants from the securities industry, damages, restitution for investors and return of or a lien against all "fraudulently obtained properties or funds," the suit says.
Calls Thursday to both companies' offices went to voicemail and neither Ryan nor other company representative responded to a request for comment.
Ryan was introduced to many of the investors through an Aurora company that sold annuities to retirees and sold some of its accounts to Ryan and Madyson in late 2015, the suit says. He told the clients they could either cash in their annuities so Ryan and Madyson could invest them in residential and commercial real estate or transfer the accounts to another investment firm, the suit says. Ryan promised annual returns of 6 percent to 10 percent, telling some the investments were guaranteed, the suit says.
Ryan and Madyson spent $8.7 million in investor funds on 13 properties in the Springs, Las Vegas, Henderson and Enterprise, Nev., including a home where Ryan and DeMeo lived, another where Rizarri lived, a Kissing Camels home where Ryan's wife lived and another home where her parents lived, the suit says.
He also used investor funds to buy two Range Rovers, a Porsche and an Audi, and paid $11,450 to a drug rehabilitation facility for treatment of DeMeo, more than $10,000 for jewelry from Tiffany's, nearly $3,400 to Victoria's Secret and more than $500 to a strip club, the suit says.
Madyson apparently began to unravel in August, when the company stopped paying employees through direct deposit and they instead received payments from Ryan's personal account, the suit says. Ryan also engaged in a check-kiting scheme that month in an attempt to repay an investor, the suit says. The defendants have sold some of the properties and are trying to sell others, while the company has failed to pay investors their third-quarter dividends and Ryan has changed his cellphone number, leaving investors no way to contact him, the suit alleges.
Ryan started investing funds for a small group of friends and business associates in 2010 to "provide value to his partners by identifying value and eliminating high fees and expenses most investors face," according to the Madyson Capital Management website, www.madysoncapital.com.
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