SEC Shuts Down Canoga Park Investment Firm

A firm accused of bilking hundreds of investors out of more than $5 million, in part by using false endorsements from television news anchor Tom Brokaw and former U.S. Surgeon General C. Everett Koop, was shut down Friday following an eight-week investigation by the federal Securities and Exchange Commission.

The Central District Court of California issued a temporary restraining order against Intellinet Publishing Inc. in response to a civil suit filed by the SEC. The suit named the Canoga Park company, as well as owner David A. Colvin of Chatsworth, Kjell Jovik of Carlsbad, Lamar Ellis of Pomona and John Larson of Los Angeles as defendants.

The court also froze the assets of the company, which acted as a “boiler room” scam in which the defendants never intended to repay investors, authorities said.

In its suit, the SEC presented evidence from the company’s now-defunct Web page, including pictures of Koop and quotations from the former public official supposedly endorsing Intellinet, said Ron Wood, assistant regional director for the SEC. The Web site also contained links to Koop’s Web page at Dartmouth University.

Company literature allegedly said that Brokaw would become Intellinet’s infomercial spokesman.

Koop and Brokaw submitted statements to the SEC saying they had never heard of the company and never endorsed it, Wood said.

“This was a somewhat sophisticated operation,” Wood said. “I never saw a scam like this run with so many layers.”

Investigators allege that the company and Colvin solicited investments for several nonexistent companies, including Medical Advantage Inc., touted as an obesity clinic, and Lamelli Inc., a supposed alcohol and drug detoxification company.

Investors were promised that the two firms would be going public within 120 days, Wood said, and Colvin guaranteed investors up to a 12% return on their money.

At the same time, Colvin was running an investment research company supposedly based in New York, Wood said. Wall Street Researchers Co. created positive analysis reports of the ghost companies and advised clients to invest in them. Wood said that although the investment research company had a New York address and phone number, phone calls would be sent to New York and rerouted back to the Canoga Park location, where Colvin would answer the phone.

With several seemingly independent companies working in concert, Wood said, the operation was far more complicated than the average phone-solicitation scam.

“To actually have a supposedly separate company write an analysis report is very unique,” Wood said.