Bismarck, ND - North Dakota Securities Commissioner Karen Tyler today announced the payment of nearly $2.9 million dollars to investors victimized in a Ponzi scheme orchestrated by David Skjerven, a former securities and insurance agent in Fargo.
The repayment to Skjerven' victims is the result of a settlement reached between the North Dakota Securities Department and InterSecurities, Inc., a broker-dealer headquartered in St. Petersburg, Florida, with whom Skjerven had at one time been affiliated.
Financial crime can have devastating consequences for investors, but as a result of this agreement between InterSecurities and the Securities Department, victims of David Skjerven's criminal conduct have been made whole, said Tyler.
In May of 2006, the Securities Department, with the assistance of the Bureau of Criminal Investigation, executed a search of Skjerven's business and began an investigation of alleged illegal securities sales activities. The Department determined Skjerven had been running a Ponzi scheme involving the sale of unregistered, fraudulent promissory notes in which over 20 investors had lost more than $2.5 million dollars. The Securities Department made a criminal referral to the Cass County States Attorney and in February of 2008 Skjerven pled guilty to 38 felony counts of securities fraud and theft and was sentenced by District Court Judge Wade Webb to ten years imprisonment, with eight suspended, and ten years of supervised probation and restitution.
At the same time, the Securities Department also began investigating InterSecurites, Inc. to determine if the firm had violated regulations by failing to adequately supervise one of its agents. The Securities Commissioner found that ISI's failure to supervise Skjerven's activities according to NASD standards contributed to investor losses. Without admitting or denying these findings, ISI voluntarily paid Skjerven's victims $2,893,075.52, representing their out of pocket losses plus 6% interest, as provided for by North Dakota law. ISI also agreed in the Consent Order with the Department to pay a civil penalty of $90,000 and to implement more stringent policies and procedures in its field audits of its registered representatives and investment advisor representatives.
ISI cooperated with the Securities Department throughout our investigation, and we appreciate their willingness to resolve this matter and provide relief to those harmed by Skjerven's egregious scheme said Tyler.
For more information please contact Mike Daley, Enforcement Attorney, North Dakota Securities Department at (800) 297-5124 or 328-4701 (Bismarck local).