Colorado Securities Commissioner charges Lonetree firm with securities law violations
DENVER (Aug. 10, 2015) – Colorado Securities Commissioner Gerald Rome announced today that he has filed a complaint in Denver District Court and obtained a temporary restraining order against Kelly Schnorenberg, his company, KJS Marketing, Inc. - operating out of Lonetree - and Craig Kahler of Casper, Wyoming. The complaint alleges securities law violations.
On August 5, 2015, Denver District Court Judge Karen Brody entered a temporary restraining order which prohibits Schnorenberg, KJS, and Kahler from offering or selling securities in Colorado. The Securities Commissioner is represented in this matter by the Colorado Attorney General’s office.
The Division of Securities, part of the Department of Regulatory Agencies (DORA), states in the complaint that Schnorenberg created KJS Marketing in 2008 with the advertised purpose of obtaining funds to invest in companies that sold insurance and financial products. The Division alleges that the company was actually set up to take investment funds from unknowing victims to be used for the personal expenses of Schnorenberg and his family and friends.
Beginning in 2009, the Division alleges that Schnorenberg, along with Kahler, solicited investments in amounts ranging from $10,000 to $50,000. Investors were told that they were investing in insurance and financial companies that needed money to recruit and train insurance sales agents, who would then sell insurance products. Investors were lured into the deal with a promise of 10 to 12 percent guaranteed returns which were supposed to be generated by the commissions on the sales of the insurance products. The victims were told that these were “risk free” investments.
In the court filings, the Division further 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. 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.
The Division alleges that most investors were told within approximately one year that the company toward which their money had been directed had failed, and were encouraged to roll their assets into a new insurance sales company on the same terms. Funds from others were simply redirected to newer companies without their knowledge. Money from new investors intended for WealthSmart were used by Schnorenberg personally, and to partially pay off previous investors. All told, KJS has allegedly brought in at least $11 million in investor funds for companies that never turned a real profit or produced returns to investors as promised.
A hearing has been scheduled for August 19, 2015 to determine if the court should enter a preliminary injunction against Schnorenberg, Kahler, and KJS Marketing from further solicitation of investor funds, and to leave the door open for potential further action by the Division. The August 5order by the Court also freezes current assets held by KJS and prohibits the defendants from any destruction of records.
Division of Securities