Fed regulators level new allegations in alleged Las Vegas Ponzi scheme

Wednesday, Feb. 28, 2001 | 11:14 a.m.

A Las Vegas company accused in September of bilking hundreds of investors in an alleged Ponzi scheme is now being accused of continuing to unlawfully sell stock even after authorities thought they had shut it down in September.

The U.S. Securities and Exchange Commission in September sued Brycar Financial Corp. and its president, Bryan Egan and his wife, Carol Egan, also known as Carol DeSalvio, alleging they ran a Ponzi scheme. The SEC alleged the defendants bilked more than 500 investors in Nevada of millions of dollars by offering guarantees that their "risk-free" and "tax-free" investments in "pre-IPO stock" and other securities would generate 500 percent returns.

The SEC's amended complaint filed Feb. 6 seeks a judgment barring the defendants from future violations of anti-fraud provisions, forcing them to disgorge all ill-gotten gains and imposing civil financial penalties against Egan.

The SEC alleged Brycar and Bryan Egan falsely told investors that "their initial investments were never at risk because these were guaranteed by bonds issued by Lloyds of London Bank and held in escrow by the SEC, that Brycar was an offshore corporation and subject only to a 3 percent tax liability in its trading profits and that Brycar would pay all capital gains taxes on behalf of its investors."

Brycar and Egan allegedly told investors that their funds had been used to buy shares of AT&T Wireless stock in an initial public offering at $8.50 a share, when in fact, no such shares were bought, the suit said.

The SEC further charged that payouts to some Brycar investors from the sale of AT&T stock were in fact sham transactions funded with money invested by more recent Brycar investors.

The SEC alleged Brycar never had a securities trading account in its name in which publicly traded securities were bought for Brycar's investors, although some securities were bought with Brycar's investors funds in trading accounts held exclusively in Egan's name.

The suit also alleged the Egans looted investor funds to support their lavish lifestyle including family vacations, artwork for their home, luxury automobiles and recreational vehicles and other personal expenses.

The SEC alleged $75,000 of Brycar investors' funds were used to make an initial deposit on a $1.5 million country club home in Heathrow, Fla., to which Egan had planned to move his family.

The suit said Egan also violated a cease and desist order issued by the Nevada Securities Division on Sep. 8 ordering him to stop operating as an unlicensed broker-dealer and selling unregistered securities.

"Despite his knowledge that such trading was unlawful, in an effort to recoup earlier trading losses, Egan continued to trade securities," the SEC charged.

Bryan Egan and his attorney, Scott Cantor, could not be reached for comment on the allegations.