The Securities and Exchange Commission on Wednesday announced fraud charges and an emergency asset freeze against a Denver-based company and two Colorado residents in connection with an alleged $15.7 million Ponzi scheme that affected more than 120 investors nationwide.
Michael J. Turnock, 68, of Denver and William P. Sullivan II, 45, of Highlands Ranch allegedly sold promissory notes to investors through Bridge Premium Finance, which purports to be in the business of insurance-premium financing, the SEC said.
The SEC’s complaint, filed in federal court in Denver, said Turnock and Sullivan promised investors annual returns of up to 12 percent and claimed that investor funds would be used to make short-term loans to small businesses to enable them to pay their upfront commercial insurance premiums.
The two men allegedly assured investors that Bridge Premium was performing well and that investor funds were “100 percent protected” through various forms of collateral on the underlying loans.
However, the SEC said Bridge Premium has been paying investor returns with funds from other investors since 2002. The company, formerly known as Berjac of Colorado, has not been profitable since at least 1998 and has lost more than $3 million during the past five years, the SEC said, and its obligations to shareholders have far exceeded its total assets, according to the SEC.
The company also was not registered with the SEC as required by law.
Attorneys for Turnock and Sullivan declined to comment.
According to the court document, Sullivan, in a phone call last month to one investor, admitted: “Your money is all gone. This is a Ponzi scheme.”
Because most funds were diverted for Ponzi payments, any collateral available on Bridge Premium’s loan portfolio will protect only a small fraction of its promissory- note investors, the SEC said.
John Mossman: 303-954-1479, jmossman@denverpost.com
