The U.S. Securities and Exchange Commission has won a permanent injunction against Milton R. Bloom-quist, Layton, whom it accuses of owing $2.5 million to clients in an investment scam.
Several affidavits were filed from alleged victims of the scheme, some showing connections with Bloom-quist through church activities.Not yet settled is the amount of restitution. SEC officials believe Bloomquist obtained $3.6 million from more than 100 investors in Utah, Idaho, Kentucky and other states.
The SEC thinks he still owes $2.5 million as principal, plus interest. Bloomquist promised investors a return of 2 percent to 3 percent interest per month, according to the agency.
An investigation is continuing to discover who invested what amounts. An agreement in which Bloomquist accepted a permanent injunction says he does not admit or deny the allegations.
He agreed to be enjoined from fraudulent activities, from using mails to sell his own promissory notes or any other security, from engaging in fraud, and from doing any business in interstate commerce.
Bloomquist must give an accounting of his funds within six days. The court will then decide if any must be returned to investors.
The suit, filed by the SEC on March 9, claims that Bloomquist created a fraudulent investment program in 1981, issuing promissory notes that were not registered with the SEC as a security.
Bloomquist "actively traded in futures and in options on futures," and told investors they'd make 24 percent to 36 percent interest per year, says the suit. It claims the loans were mostly unsecured and that "interest" paid out actually was only from new investments.
"Bloomquist consistently lost substantial sums of money through his trading activities. The amount of said losses is in excess of $1.1 million," it says.
According to the suit, Bloomquist told investors several untrue statements, including that he traded in securities, his program was nearly risk-free, and he made huge profits.
Actually, it says, Bloomquist engaged in fraud, trading in futures, not securities. The investment program was "highly risky" and investments could be wiped out, the SEC charged; he had large losses and no profits with which to pay interest.
An affidavit from Ruth A. Hun-saker, Centerville, says, "We received interest on our investment-loans until about April 2, 1987, when we made a demand to Bloomquist for repayment of $35,000 of our principal."
It says the money was a substantial part of the Hunsakers' retirement savings. "Our attorney looked into Bloomquist's present financial picture and told me things look bleak."