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During the time that $24 million went missing from thousands of clients' retirement accounts, American Pension Services owner Curtis L. DeYoung and wife Michelle received about $3 million in salary and loans that weren't repaid, according to allegations in a new federal court lawsuit.
They also siphoned off another $4.5 million to friends, according to the complaint filed on behalf of the court-appointed receiver of the Utah company that provides self-directed Individual Retirement Accounts and 401(k)s.
In the suit filed Wednesday, receiver Diane Thompson is seeking the return of $3 million including interest to the Riverton company, which is insolvent as a result of the missing funds.
The Securities and Exchange Commission sued Curtis DeYoung and the company in April alleging that he had misappropriated millions of dollars from the accounts of clients who place their money with the company and then direct their own investments. The company earns fees from holding the accounts but is not allowed under law to use clients' retirement monies.
Beginning in 2000, Curtis is alleged to have fraudulently transferred $24 million into ill-conceived investments or used monies for other purposes, causing the company to become insolvent. DeYoung created accounting entries to hide the deficit until the SEC sued, the lawsuit says.
"During this time, Curtis paid exorbitant salaries to himself and his wife, which by 2013 exceeded $520,000 per year," says the new complaint filed in U.S. District Court for Utah.
Curtis DeYoung's attorney, Paul Moxley, declined to comment.
DeYoung's salary grew from $100,000 in 2001 to about $250,000 in 2010. Michelle DeYoung's pay went from about $24,000 a year in 2001 to about $250,000 in 2010.
Since January of 2011, each was paid about $520,000 a year, according to the lawsuit. In total, Curtis DeYoung received about $1.9 million and his wife $1 million.
Of those totals, about $475,000 was transferred into retirement accounts in order, the lawsuit alleges, to defraud clients who would have to overcome legal obstacles to recover their monies.
In February, before the SEC lawsuit, the DeYoungs transferred their own retirement accounts out of American Pension Services and into bank accounts of a newly formed company in an effort to shield them, the complaint alleges.
In addition to personal monies, Curtis DeYoung diverted about $4.5 million in client funds to friends, father and son Michael D. Memmott Sr. and Michael D. Memmott Jr., and entities the Memmotts controlled, the lawsuit says.
The complaint charges that the Memmotts "conspired with and actively assisted" DeYoung in the allegedly fraudulent transfers. Michelle DeYoung wrote off "significant debts" the Memmotts owed the company, in violation of policy, the suit says.
Attorneys for the father and son did not reply to an email seeking comment.
Mark Gaylord, an attorney for the receiver, said "Ms. Thompson will continue to take steps that she believes are necessary to recover monies improperly and wrongfully misappropriated by Mr. DeYoung including pursuing those who benefited from his wrongful conduct, including Mr. and Mrs. DeYoung."
A report by the receiver to U.S. District Judge Robert Shelby says information on the DeYoungs and Memmotts were provided to the FBI. Spokespersons for the FBI and U.S. Attorney's Office for Utah declined to comment on whether a criminal investigation was underway.
Thompson is now revising a liquidation plan in which the big question is how to divide the $24 million in losses among American Pension Services clients.
Moxley also has filed a motion to withdraw from the case, citing DeYoung's inability to pay his legal bills unless the court approves transfers from now-frozen funds. The attorney has a pending motion before Shelby to approve payment of his fees.