The Securities and Exchange Commission (“SEC”) announced on April 26, 2021, that it filed an emergency action and obtained an asset freeze to stop an alleged ongoing fraudulent Ponzi scheme.  The SEC claims that from 2015 to 2021, Harbor City Capital Corp. (“Harbor City”) and its founder and CEO, Jonathan P. Maroney raised more than $17.1 million from over 100 investors through unregistered, fraudulent securities offerings.

The defendants originally sold the securities as promissory notes and agreements, offering investors 2%-6% in interest rates for 12-36 months. The investors were promised a full return on their investment principal. The defendants solicited money through Harbor City’s website and online marketing videos posted to YouTube and social media platforms like Facebook. The investors were told in the marketing videos that their money would be used to fund Harbor City’s lead generation business which the SEC claim describes as the process of capturing online interest in a service or product for the purpose of developing sales leads.

Jonathan Maroney allegedly ensured the safety of the Harbor City bonds by equating it to “going down to your local bank and purchasing a certificate of deposit,” but the SEC reports that those representations were false. The SEC estimates that of the $17.1 million in investor funds, roughly $500,000 may have gone to business expenses.

Instead, the investors’ money was spent on:

• $1.35 million to pay credit card bills,
• $827,000 towards purchasing and maintaining a waterfront home,
• $808,00 towards housing and renovation expenses,
• $90,000 Mercedes Benz purchase,
• $265,000 cash withdrawn from ATM,
• $394,000 deposited into a joint account with Maroney’s wife,
• $58,000 towards Maroney’s wife’s credit cards,
• $617,000 transferred to an entity Maroney controls,
• $1.4 million in payments to entities unrelated to purpose of the offerings

In total, according to the SEC, about $6 million of investors’ money was misappropriated and misused by Jonathan Maroney. In addition, the defendants were allegedly operating a Ponzi scheme to repay the high rates of returns promised to investors. From 2017-2021, Harbor City generated no significant revenue from any ventures, including its customer lead generation business. In order to make interest payments to existing investors, Maroney utilized new investor money. The SEC claims Maroney used a least $6.5 million of investor funds from 2017-2021 to make interest payments and other payouts.

The complaint lists the following defendants in its claim:

Defendants:

• Harbor City
• HC Ventures (Nevada limited liability company established 2014)
• HCCF-1 (Nevada limited liability company formed August 2018)
• HCCF-2 (Nevada limited liability company formed August 2019)
• HCCF-3 (Wyoming limited liability company formed September 2019)
• HCCF-4 (Wyoming limited liability company formed November 2019)
• HCCF-5 (Wyoming limited liability company formed July 2020)
• HC Digital (Nevada corporation established in 2017)
• Jonathan P. Maroney

Relief Defendants:

• Celtic (Wyoming Limited Liability company)
• Tonya L. Maroney