The lawsuit accuses DeYoung of using of customer funds for unauthorized investments, particularly with a series of his personal friends.
"DeYoung has squandered millions of dollars of customer funds on high-risk investments, resulting in huge losses to investors," the lawsuit says, further alleging that DeYoung failed to inform customers of the losses and continued to collect fees "on worthless securities and cash, further victimizing APS' customers."
DeYoung could not be reached for comment. Attorneys who had represented him in the past did not return emails.
American Pension Services' master cash accounts were short $22.7 million at the end of 2013, the lawsuit said. When asked about the missing funds during unspecified sworn testimony, DeYoung invoked his constitutional right against self-incrimination.
People who want to direct their own investments from an individual retirement account, 401(k) or other retirement account use companies such as American Pension Services to hold their monies. Such companies are required to get written instructions from the account owners when they direct funds into certain investments.
But the SEC lawsuit alleges that at least some customer letters were forged.
"If that happened, that would be a fundamental breach of the most unequivocal prohibitions that bind retirement custodians," said Wayne Klein, an attorney who is a receiver in the National Note of Utah fraud case.
National Note of Utah was one of the companies that received APS customer funds, the SEC said. National Note of Utah was sued along with owner Wayne LaMar Palmer by the SEC in 2012 for allegedly operating a Ponzi scheme that took in $100 million.
Klein estimated that more than $12 million from 274 National Note investors came via American Pension Services.
Besides National Note of Utah, DeYoung also invested in Management Solutions Inc. and The Companies. The SEC has taken regulatory action against those two companies as well.
The receiver appointed by the court to take over the company, Los Angeles attorney Diane Thompson, informed customers through an email that their accounts had been frozen, at least temporarily.
"Our intent at this time is to safely secure all assets and accounts," Thompson said in the advisory. "We will make an effort to lift this restriction as soon as possible under the circumstances."
The receiver has established a website, www.apsreceiver.com, for communicating with the pension fund's customers.