SEC Dismantles Deceptive Mother-Son AI ‘Supercomputer’ Investment Offering

On Monday, the Securities and Exchange Commission (SEC) announced that it filed an emergency action and obtained a temporary restraining order to stop an alleged fraud taking place in Las Vegas, Nevada. According to the agency, the defendants claimed funds would be invested in stocks and cryptocurrency based on the recommendations of a supercomputer.

The complaint said that the defendants, Profit Connect Wealth Services Inc., 86-year-old Joy I. Kovar and her son, Brent Kovar, labelled as a recidivist by the SEC for previous stock fraud, jointly raised more than $12 million from at least 277 retail investors for illegitimate purposes.

The District of Nevada complaint filed on July 8 and unsealed on July 16 contends that since May 2018 the defendants have fundraised through Profit Connect, a company that allegedly trades in stock, asset, and Forex markets.

The company, particularly through its website, and the defendants purportedly touted the supercomputer’s success as consistently choosing investments generating returns of 20-30% per year with monthly compounding interest. Furthermore, the filing alleges, Profit Connect praised its supercomputer-driven products as safe vehicles for retirement investment, children’s education funds, and even offered a money back guarantee.

The SEC says otherwise, however, asserting that none of the investor funds were used for the investment purposes represented. Instead, the filing alleges that the defendants misappropriated millions, including transferring funds to Joy Kovar’s personal bank account, paying millions of dollars to promoters, and “making Ponzi-like payments to other investors.” 

Last week, the District of Nevada court overseeing the case granted the SEC the emergency relief requested. On July 26, a hearing will be held to consider next steps including whether a preliminary injunction, an accounting, and the appointment of a receiver are appropriate.

The complaint charges the defendants with violating Securities Exchange Act of 1934 provisions. In addition, it charges Joy Kovar, the company’s self-appointed president, treasurer, secretary, and director, separately for each of Profit Connect’s violations. The SEC seeks permanent injunctions, disgorgement, prejudgment interest, and the imposition of civil penalties.