A Lone Tree securities broker is accused of collecting $11 million from investors, promising their money was funding “risk free” insurance and financial companies but spending the cash on himself and his family.
Colorado Securities Commissioner Gerald Rome on Wednesday said he has obtained a temporary restraining order preventing Kelly Schnorenberg, his company, KJS Marketing Inc., and Craig Kahler of Casper, from offering or selling securities in Colorado.
The order was issued Aug. 5 in Denver District Court . It freezes assets held by KJS and prohibits the defendants from any destruction of records.
According to a statement from Rome’s office, Schnorenberg created KJS Marketing in 2008 pitching opportunities to invest in companies that sold insurance and financial products. Schnorenberg and Kahler allegedly solicited investments in amounts ranging from $10,000 to $50,000 saying the money would be used to recruit and train insurance agents.
Investors were promised commissions on the agents’ sales would return profits of 10 to 12 percent. But within a year, some investors were told the company had failed and were encouraged to roll their assets into a new company promising the same terms. Others had their money redirected without their knowledge.
In the court filings, the division alleges that Schnorenberg is currently soliciting investor funds for WealthSmart America, LLC, and is purportedly funneling the vast majority of the funds to himself, his mother, and his long-time girlfriend.
Money from new investors intended for WealthSmart was used by Schnorenberg personally, and to partially pay off previous investors, Rome said in the news release. KJS has allegedly brought in at least $11 million for companies that never turned a real profit or produced returns.
Prior to WealthSmart, Schnorenberg sought investor funds for a series of companies: Salus Marketing Enterprises, Trinity Affiliated Group, Premier Advantage Insurance Agency, Hegemon Holdings and Quantum Success Strategies.
A hearing has been scheduled for Aug. 19, 2015 to determine if the court should enter a preliminary injunction against Schnorenberg, Kahler and KJS Marketing.
