Case 2:21-cv-01298-JAD-BNW Document 1 Filed 07/08/21 Page 1 of 29
`Case‘l—cv-OlZQ‘AD-BNW Document 1 Filed 07/08/21 We 1 Of 29 .
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`
`
`THRYN C, WANNER, (Cal. Bar No. 269310)
`
`a11: wannerkgsecégov
`TE . M. MELS
`(
`a1. Bar No. 185209)
`
`ail: melsont@sec.gov
`.
`_
`A rneys for Plaintiff
`Se. unties and Exchan e Q0mm1s$10n
`M1 hele Wein Layne,
`eglonal Dlrector
`Ka harine Zoladz, Assocmte Regional Director
`y J. Longo, Reg10nalTr1a1 ounsel
`
`44 S. Flower Street, Suite 900
`L0 Angeles, Callfornia 90071
`Te ephOne:
`323 965-3998
`Fa s1m11e:
`213 443-1904
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`
`
`
`
`
`E1150
`_\ NTERED
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`ff?“
`351111130111
`COUNSEL/PARTIES OF RECGIED q
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`
`,
`
`
`STRICT COURT
`DlSTRl
`BY
`CT OF NEVADA
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`UNITED STATES DISTRICT COURT
`
`DISTRICT OF NEVADA
`
`2:21-ev-01298-JAD-BNW
`
`COMPLAINT
`
`(Filed Under Seal)
`
`
`—‘
`
`s CURITIES AND EXCHANGE
`OMMISSION,
`
`§
`
`Plalmlff’
`
`VS.
`
`
`
`P OFIT CONNECT WEALTH
`s RVICES INC. JOY I. KOVAR, and
`BRENT CARSON KOVAR,
`1
`Defendants.
`
`
`
`
`
`
`
`

`

`
`
`Case 2:21-cv-01298-JAD-BNW Document 1 Filed 07/08/21 Page 2 of 29
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`! Case‘l-cv-OlZQ‘AD-BNW Documentl Filed 07/08/21 WeZonQ.
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`Plaintiff Securities and Exchange Commission (“SEC”), alleges as follows
`
`ag inst Defendants Profit Connect Wealth Services, Inc. (“Profit Connect”), Joy Irene
`
`Carson Kovar (“J. Kovar”) and Brent Carson Kovar (“B. Kovar”) (collectively,
`
`“Defendants’fi.
`
`INTRODUCTION
`
`
`
`
`
`1.
`Since at least May 2018 through the present, J. Kovar and her recidivist
`son, B. Kovar, have raised at least $12 million from over 277 investors throughout
`
`the country through their company, Profit Connect. The SEC brings this emergency
`enfbrcement action against Defendants to stop their ongoing offering fiaud and to
`
`freeze the funds held by Defendants, which rightfully belong to investors. As set forth
`bellow, Defendants have misappropriated millions of dollars that they received from
`
`investors for, among other things, their own personal use.
`
`2.
`Defendants promised investors that their money would be invested in
`ec; rities, bitcoin and other cryptocurrencies based on recommendations made by an
`Artificial intelligence supercomputer.” Profit Connect claims that its supercomputer
`
`“s
`
`corrsistently generates enormous returns, which in turn allows Profit Connect to
`guairantee investors fixed returns of 20%-30% per year with monthly compounding
`interest.
`
`3.
`
`However, Profit Connect is a fiaud. The majority of funds received by
`
`Profit Connect did not come from any investments or profits generated by a
`“supercomputer.” Instead, over 90% of Profit Connect’s funds came fiom investors.
`
`After receiving investors’ money, Defendants did not use these funds to trade
`
`securities, invest in foreign currencies, buy cryptocurrencies, or do any of the things
`
`that Profit Connect promised its investors it would do with their money. Instead,
`
`Deandants misused investormoney by, among otherthings, transferring millions of
`dollars to J. Kovar’s personal bank account, paying millions of dollars to promoters
`
`who brought investors to the Profit Connect website to invest, and making payments
`
`to other investors in a Ponzi-like fashion.
`
`

`

`E
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`4.
`
`By engaging in this conduct, Defendants are violating, and, unless
`
`res ained and enjoined, will continue to violate Section 17(a) of the Securities Act of
`
`19 3 (the “Securities Act”) [15 U.S.C. § 77q(a)], Section 10(b) of the Securities
`
`Exphange Act of 1934 (the “Exchange Act”) [15 U.S.C. § 78j(b)], and Exchange Act
`Ru e 10b-5 thereunder [17 CPR. § 240.10b-5].
`
`
`
`THE DEFENDANTS
`
`5.
`
`Profit Connect Wealth Services Corp. is a Nevada corporation formed
`
`‘ ay 2, 2018. Its principal place of business is Las Vegas, Nevada. Profit
`Co:
`ect was formed by J. Kovar, who has served as its president and treasurer since
`
`its nception. Profit Connect purports to place investor funds in various investments
`as determined by a “supercomputer” using “Artificial Intelligence.” Profit Connect
`guarantees investors fixed returns of 20% to 30% per year (depending on the amount
`inv? sted) With monthly compounding interest. From its formation in May 2018 to the
`pretent, Profit Connect has had no discemable source ofincome orrevenue. Rather,
`
`virtually all of its funds appear to have come from investors. Neither Profit Connect
`
`r1011 its securities offerings are registered with the SEC.
`
`6.
`Joy Irene Carson Kovar, age 86, resides in Las Vegas, Nevada. J.
`K0: ar formed Profit Connect on May 2, 2018 with herself as its president, treasurer,
`sec‘ etary and director. In April 2019, J. Kovar named her son B. Kovar as the
`dir jctor ofProfit Connect in her place. She also named another individual as the
`seci‘etary ofProfit Connect. J. Kovar remained the president and treasurer ofProfit
`Connect and she holds those positions today. J. Kovar has opened at least eight bank
`acc‘ unts in the name of Profit Connect at three different banks. J. Kovar was the sole
` '
`atory on six of the Profit Connect bank accounts, including the primary account
`tha: received investor funds, until she recently added her son, B. Kovar, as a signatory
`
`
`
`to tho existing Profit Connect bank accounts and to two new bank accounts in the
`name of Profit Connect. J. Kovar has never held any securities licenses and has never
`beejh registered with the SEC in any capacity.
`
`2
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`Case 2:21-cv-01298-JAD-BNW Document 1 Filed 07/08/21 Page 4 of 29
`Case‘l-cv-OlZQbAD-BNW Document 1 Filed 07/08/21 we 4 of 29.
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`7.
`
`Brent Carson Kovar (“B. Kovar”), age 54, is a resident of Las Vegas,
`
`ada and is the son of J. Kovar. On April 4, 2019, B. Kovar was named as the
`
`Ne‘f
`
`dir; ctor of Profit Connect with J. Kovar remaining its president and treasurer. As
`de cribed in finther detail below, B. Kovar has touted Profit Connect on social media
`to investors, received ahnost $353,000 of Profit Connect investor funds and
`
`facilitated the purchase of a residential home in the name of Profit Connect. B.
`Kovar has never held any securities licenses and has never been registered with the
`SEC in any capacity.
`
`8.
`In 2010, the SEC obtained a permanent injunction, a penny stock bar,
`an i an officer and director bar against B. Kovar for his role in a pump-and—dump
`
`ofiring fraud. See SECv. Sky Way GlobalLLC, etal., Civ. No. 09-CV-455 (M.D.
`
`Fla. Mar. 13, 2009) (Dkt. No. 158). The Sky Way Global LLC complaint alleged that
`
`
`
`
`
`B. Kovar made material misrepresentations and omissions to investors about Sky
`way Global possessing a nationwide network of broadcasting towers and anti-
`terrorism technology. J. Kovar served as the secretary of Sky Way Global but was
`not charged in that matter.
`A
`
`JURISDICTION AND VENUE
`
`The Court has jurisdiction over this action pursuant to Sections 20(b),
`9.
`‘
`20ld)(1) and 22(a) of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d)(1) & 77v(a)],
`
`and Sections 21(d)(3)(A), 21(e) and 27(a) of the Exchange Act [15 U.S.C. §§
`
`78u(d)(1), 78u(d)(3)(A), 78u(e), &78aa(a)].
`‘
`10. Defendants have, directly or indirectly, made use of the means or
`
`instmmenmlities of interstate commerce, of the mails, or ofthe facilities of a national
`
`sedurities exchange in connection with the transactions, acts, practices and courses of
`business alleged in this complaint.
`
`11.
`
`The SEC seeks to restrain and enjoin the Defendants from engaging in
`
`th 1 acts, practices, and courses of business described in this Complaint and acts,
`
`pr ctices, and courses of business of similar purport and object. The SEC seeks
`
`3
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`Case 2:21-cv-01298-JAD-BNW Document 1 Filed 07/08/21 Page 5 of 29
`Case‘l-cv-OlZQbAD-BNW Document 1 Filed 07/08/21 Ue 5 of 29 .
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`
`
`te porary, preliminary, and permanent injunctions, disgorgement of ill—gotten gains
`de l'ved from the conduct alleged in the Complaint plus prejudgment interest thereon,
`an 1 civil penalties pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)]
`
`an Section 21(d)(3) of the Exchange Act [15 U.S.C. §§ 78u(d)(3)], and such other
`reliefthat the court may deem appropriate.
`12. Venue is proper in this district pursuant to Section 22(a) of the Securities
`Aclt [15 U.S.C. § 77V(a)] and Section 27(a) ofthe Exchange Act [15 U.S.C. §
`78 3 a(a)] because Profit Connect is a Nevada corporation with its principal place of
`
`bu iness located in this district, because J. Kovar and B. Kovar reside in this district,
`
`an because many of the acts and transactions constituting violations of the federal
`
`sequrities laws occurred within the district, including, but not limited to,
`milsappropriation of investor funds through transactions at banks located within this
`dis 'ct.
`
`BACKGROUND
`
`A.
`
`Defendants Raised Money from Investors through the Offer and
`
`l
`
`13.
`
`Sale of “Supercomputer Seat” Wealth Builder Accounts
`Profit Connect claims that it uses “proprietary A[rtificial] intelligence”
`,3 “
`
`an a “supercomputer
`
`exiosuretothe current stockmarket.”
`
`to deliver higher than average returns, without the risk
`
` 1
`
`1
`
`14.
`
`Profit Connect claims that it trades in “Forex, Stock and asset markets”
`
`and this activity “helps to diversify its income stream from the company’s main
`
`indome source of Blockchain Mining.”
`
`
`
`15.
`Profit Connect tells investors that they have the opportunity to invest by
`oplaning a “Wealth Builder Supercomputer Seat APR account.”
`
`16. When investors open an account with Profit Connect, they are
`
`p chasing a Wealth Builder supercomputer “seat” which represents “cycle time on
`
`on supercomputer system,” according to Profit Connect.
`
`17.
`
`Profit Connect states that after opening a wealth builder account, a
`
`4
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`l
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`

`

`Case 2:21-cv-01298-JAD-BNW Document 1 Filed 07/08/21 Page 6 of 29
`Case al-cv-0129akD-BNW Documentl Filed 07/08/21 aeEOf 29 G
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`representative will call the investor to answer any questions and to provide the
`
`investor with a “custom wealth builder spreadsheet” that is updated monthly.
`1
`18. As set forth in further detail below, Profit Connect’s claims about the use
`of[investor funds, safety of investor funds and its profits are all false.
`
`
`
`
`B.
`
`Defendants Promote Profit Connect Through its Website and on
`
`Various Social Media Platforms through “Agents and Affiliates”
`
`1.
`
`The Profit Connect Website
`
`19.
`Profit Connect encourages investors to invest their money through its
`wdbsite located at https://profitconnect-wealthservicescom/.
`‘
`20.
`The Profit Connect website guarantees investors that in return for
`
`investing a lump sum, they will receive fixed annual returns of 20% to 30%,
`
`depending on the amount invested, and monthly compound interest.
`
`Profit Connect also advertises on its website that it has a “monthly
`21.
`su scription” option in which an investor deposits a set amount each month, ranging
`
`
`
`fro $50 to $1,000, with guaranteed returns of 15% to 20% per year.
`ll
`22.
`On its website, Profit Connect actively encourages investors to use
`mdney from their retirement funds to invest with Profit Connect and includes step-by-
`stei) instructions directing investors how to form a self-directed IRA.
`3
`23.
`Profit Connect advertises a “Wealth Builder Home Equity” account on
`its {website with a minimum investment of $100,000 and a 48-month term, which
`
`Prdfit Connect claims will result1n a 20% fixed annual return with “compound
`mohthly APR.” Profit Connect advertises this account to investors who want to
`invest using a “50% home equity lien” and “50% USD funds.”
`:1
`24.
`Profit Connect also offers an 18 year “Wealth Builder Youth” account
`that it targets to “Parents, Grandparents, Family and Friends that want to give a gift of
`sudcess.” Profit Connect promises 20% fixed annual returns and “compound monthly
`APR” for investors who open this type of account.
`
`25.
`
`Profit Connect states on its website that it “internally trades on the New
`
`5
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`
`
`

`

`
`
`
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`Case 2:21-cv-01298-JAD-BNW Document 1 Filed 07/08/21 Page 7 of 29
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`Y rk Stock Exchange, NASDAQ, Japan Exchange Group and Shanghai Stock
`
`hange using Ai and experienced traders.”
`
`1
`
`26.
`
`The Profit Connect website claims that the Wealth Builder “APR is
`
`Fixed and Locked-in” and “the APR is not affected by the stock market, foreign
`ex “ hange currency market or the asset market.” This is because, Profit Connect
`co j tends, it “utilizes multiple streams ofrevenue, so if one income area experiences a
`
`slo down the other profit streams make up the difference.”
`
`27.
`Profit Connect tells investors that Wealth Builder accounts “are not
`afflicted by the current market volatility” because the “supercomputer system guides
`thj use ofProfit Connect internal funds to be focused on long and short positions in
`for? ign currency, stocks, block-chain calculations, venture capital services and real
`estEte opportunities.”
`
` l
`
`Profit Connect promises investors on its website that its offerings
`28.
`include its “famous peace of mind money back guarantee” and represents that its
`
`“financial reserves are significantly higher than all of its Seat purchaser’s deposits
`combined.”
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`29.
`The Profit Connect website tells investors that their funds are invested in
`secitors chosen by the Profit Connect “supercomputer” and the profits are then
`“ddposit[ed] into [a] FDIC-NCUA Insured Profit Connect Cumulative Business
`Accoun ” at Bank ofAmerica, Chase, Wells Fargo and/or Navy Federal Credit
`Union. The Profit Connect website includes purported official logos for each ofthese
`bartks andProfit Connectrefers to these financial institutions as “ourbanking
`
`ass ciation.”
`
`30.
`
`The Profit Connect website has a chart showing that investors are not
`
`charged any fees for management, operating expenses, or other expenses.
`“
`31. As the founder, president and treasurer ofProfit Connect, and the person
`with sole signatory authority over all of the bank accounts in the name of Profit
`Connect until very recently, J. Kovar controls Profit Connect. On information and
`
`6
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`

`

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`Case 2:21-cv-01298-JAD-BNW Document 1 Filed 07/08/21 Page 8 of 29
`Case‘l-cv-OlZQwD-BNW Document 1 Filed 07/08/21 We 8 of 29 .
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`be :ief, J. Kovar had ultimate authority over the content of Profit Connect’s website
`an 1 the misstatements made to investors through its website.
`
`32. As detailed below, B. Kovar has made misrepresentations similar to
`
`th se on the Profit Connect website in a YouTube video promoting Profit Connect to
`
`pojential investors that is currently accessible to the public.
`A
`2.
`“Agents and Affiliates” were Paid Commissions to Promote
`
`1
`
`Profit Connect
`
`33.
`
`In addition to its website, Profit Connect relies on promoters who tout
`
`Prdfit Connect and its substantial fixed returns using their social media platforms.
`‘
`34.
`Profit Connect has a separate website devoted to the purported 1000+
`“Sticcessful worldwide agents and affiliates,” which is located at https://profitconnect—
`
`ag¢nt.com/.
`
`
`
`35.
`The Profit Connect website for agents and affiliates states that they are
`paid up to 20% for referrals and can receive additional bonuses based on factors such
`as the number ofreferrals and monthly sales volume.
`
`36.
`Profit Connect’s bank records reflect that from May 2018 through April
`122021, over $3 million, or approximately 26% of the funds from investors in Profit
`
`Coj
`
`ect, were used to pay those who promoted Profit Connect.
`
`These “agents and affiliates” who promote Profit Connect often use their
`37.
`so iial media platforms to publicize the Profit Connect wealth builder accounts on
`YtleTube, Facebook, Instagram, Twitter and LinkedIn.
`
`
`
`‘
`
`38.
`
`Promoters often post an excerpt or screenshot from the Profit Connect
`
`website on their social media showing 20%-30% fixed and guaranteed returns (with
`
`mqnthly compounding interest) and they direct their followers to the Profit Connect
`
`website.
`For example, on April 16, 2021, one of the major promoters of Profit
`i
`39.
`Coimect posted a Facebook message with an excerpt from the Profit Connect website
`featuring the 20%-30% guaranteed return. The post stated the following: “I just
`
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`re ‘lly wish all my friends and family, whom I love and care for greatly, would open
`
`th ir minds enough in order to allow themselves to take advantage of this amazing
`pl itform! ! 1! It’s not a new concept anymore, it has a 28 month proven track record
`
`wilh major partners like Tesla & Berkshire Hathaway!!! You’re only hurting
`
`yojnself by ignoring it.”
`
`40. Another major promoter of Profit Connect posted the following on
`T ‘1 itter on October 23, 2019: “Yep, it’s official!! We have now taken possession of
`
`o ‘ new 27,600 Sq Ft Data Center. If you would like to know more about what we
`do take look at this video, and feel free to message me.” There is a link to a
`
`YouTube video about Profit Connect as part of this post.
`i
`41. Another post on Facebook from a Profit Connect promoter, dated April
`
`
`
`28, 2021, states “[w]hen the company you’ve been working with since the day they
`
`started just over 2 years ago, surpasses $1 Billion in sales in its first 27 months, you
`kn w you’re in the right place, at the right time, working with the right people! ! l I” In
`
`re ponse to a question about whether this post referred to a parent company or to
`
`[P ‘ofit Connect] Wealth Services, the Facebook author responded “Solely WS, which
`
`is hat I’m referring to launched 27 months ago.”
`‘3
`42.
`In a video dated October 8, 2020, that is currently accessible to the
`
`pu: lic at www.youtube.com/watch?v= zgoAVTegch, a promoter for Profit Connect
`tel 5 potential investors about the company and says, among other things, that “[o]n
`th 1 wealth builder,” there is “an any time money back guarantee .
`.
`. that means that
`
`an time that you need your money back, you can, in fact, say, ‘Give me my money
`
`bajbk,’ and we will return it to you, no question[s] asked.”
`
`43.
`In a Video dated March 24, 2021, that is currently accessible to the
`pu3 lic at wwwyoutube.com/watch?app=desktop&v=k35FiZhg7W4, a promoter of
`
`Pr fit Connect touts Profit Connect to potential investors. In that Video, the promoter
`
`re ers to Bank of America, Chase, Wells Fargo and Navy Federal Credit Union and
`
`cl ims that “these banks vetted us amazingly deeply .
`
`.
`
`. they put us through the
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` rin er.” He adds that “they wouldn’t stamp their name on our project and our
`
`w site, and give us approval, and give us FDIC if they weren’t going to vet us
`treinendously well.” He adds that investments in Profit Connect are “safe and secure
`
`
`
`wi h FDIC insurance.”
`
`1
`
`3.
`
`B. Kovar Assists the Profit Connect “Agents and Affiliates”
`
`and Solicits Investors on YouTube
`
`44.
`
`B. Kovar has been the sole director of Profit Connect since April 2019
`
`and has been identified on social media platforms as its CEO.
`
`45. As of May 2021, B. Kovar was added as a signatory to four Profit
`Connect bank accounts, including the bank account that receives investor funds.
`1
`46.
`From May 2018 through April 2021, at least three deposits from two
`investors who invested a combined amount of over $693,000 in Profit Connect
`
`indluded the comment “Attn. Brent” when wiring money to Profit Connect.
`‘
`47.
`B. Kovar appears in a promotional Video dated February 20, 2019. This
`YduTube Video remains accessible to the public using following intemet link:
`
`
`1 s://www. outube.com/watch?v=2thYC'kTeE
`
`48. On this Video, B. Kovar states that “Profit Connect
`
`is an artificial
`
`intlelligence company.” He states that Profit Connect began using artificial
`intblligence and supercomputers to mine bitcoin, which “created a fair amount of
`Wdalth,” funded Profit Connect, and paid the salaries of its employees.
`
`1
`49.
`On this YouTube video, B. Kovar states that Profit Connect has recently
`depided to “offer [its artificial intelligence technology] to the public as a computer
`seat which has a fixed interest rate. So whether bitcoin goes up or bitcoin goes down,
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`
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`yo still make the same percentage. If you’re in the 20 percent package, of course
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`yet are fixed at20...”
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`‘
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`50.
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`B. Kovar claims in the video that Profit Connect can offer such high
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`reflurns because the supercomputer “sees what’s happening ahead of time. . .” and
`‘6
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`glets out of the trade before it loses money.”
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`Case 2:21-cv-01298-JAD-BNW Document 1 Filed 07/08/21 Page 11 of 29
`Case a-cv-01298‘D-BNW Document 1 Filed 07/08/21 P‘e 11 of 29.
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` adiis that “[s]o, we have several different ways that Profit Connect Wealth Services is
`
`
`builder accounts not only pay a fixed interest rate, but the interest compounds
`
`54.
`
`B. Kovar states on this Video that Profit Connect is engaged in the same
`
`business activities as large banks, except that Profit Connect has decided to share its
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`“hIge returns” with investors and “give it backto the person that is actually putting
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`1 money in.” As such, B. Kovar claims that Profit Connect is a “disrupter” in the
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`th
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`banking industry just as Uber disrupted the taxi industry “because it’s about time that
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`people should share in those high interest rates.”
`‘
`55.
`B. Kovar tells investors on this YouTube video that they can move
`mdney from their 401(k) retirement account and transfer their retirement fimds to a
`Prbfit Connect wealth builder account. B. Kovar adds that a Profit Connect
`representative “can help you with all of that of where it needs to be transferred.”
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`1:
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`56.
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`B. Kovar also represents on this YouTube video that “of course there’s
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`nofees in this” unlike a “mutual fund or hedge funds or any of these indexes
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`where most of your interest is taken in fees.”
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`57.
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`B. Kovar tells investors on this video that “[i]f you would like to opt out,
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`you can do that in any quarter” and then “all of your money would then be sent
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`.
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`51.
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`On this YouTube video, B. Kovar holds up an object and states “I have a
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`mi
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`ing card here to show you what they look like” and claims that Profit Connect
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`usfs artificial intelligence to “only decode [those mining cards] offthe block chain
`that actually have transactions” which makes them “much, much more efficien .”
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`52.
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`On this YouTube video, B. Kovar states that Profit Connect has recently
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`expanded beyond mining bitcoin and now engages in trading currencies, trading
`cryptocurrency, and trading securities on the New York Stock Exchange. B. Kovar
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`cr ating money.” B. Kovar represents that “these are all the different places that the
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`m ney actually goes” and “the money goes to work immediately.”
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`53.
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`B. Kovar states on this YouTube video that Profit Connect wealth
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`
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`mdnthly, which B. Kovar claims is “the secret weapon of wealt .”
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`\OOO\]O\U1-bUJl\)i—t
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`Case 2:21-cv-01298-JAD-BNW Document 1 Filed 07/08/21 Page 12 of 29
`1 Caseil-cv-OlZQB‘D-BNW Documentl Filed 07/08/21 we 12 of 29.
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`dirpctly back to you, the original deposit that you put in for the seat as well as all the
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`compound interest.” Profit Connect can repay investors at any time, B. Kovar claims,
`because “[i]t stays your money the entire time” and “[y]ou don’t lose any of it.”
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`58.
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`B. Kovar also states on this video that because Profit Connect uses
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`
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`
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`1r“‘4art ficial intelligence to leverage investments, “you don’t have to do anything. You
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`just have to enjoy life and let the time go by.”
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`I
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`59.
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`On this video, B. Kovar directs investors to the Profit Connect website
`
`forl additional information about Profit Connect.
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`60.
`
`On this YouTube Video promoting Profit Connect, B. Kovar failed to
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`disclose the judgment entered against him in the Sky Way Global offering fraud case,
`and introduces himself solely as “Brent,” without providing his last name.
`‘
`C.
`Defendants are Misappropriating Money from Investors
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`‘
`61.
`Investors send money to Profit Connect primarily by wire and check to a
`checking account in the name of Profit Connect at Bank of America with the account
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`nutnber ending in 8677 (hereinafter “the Profit Connect Investor Account”). On
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`redeipt, the Profit Connect investor money is pooled in the Profit Connect Investor
`Adcount.
`‘
`62.
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`The Profit Connect Investor Account was opened by J. Kovar in May
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`20F8.
`J Kovar was the only person with signatory authority over the Profit
`63.
`‘
`Cdnnect Investor Account until May 21, 2021.
`‘1
`64.
`On or about May 21, 2021, B. Kovar was added as a signatory to the
`Prbfit Connect Investor Account.
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`65. When B. Kovar was added as a signatory to the Profit Connect Investor
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`Alcount on or about May 21, 2021, B. Kovarwas identified as “president” and J.
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`K var was identified as “CEO” on the bank signatory forms.
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`66.
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`Profit Connect’s bank records from May 2018 through June 2021 reflect
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`that it received no revenue. For example, the Profit Connect bank accounts do not
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`Case 2:21-cv-01298-JAD-BNW Document 1 Filed 07/08/21 Page 13 of 29
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`; Case 2:21-cv-01298‘D-BNW Documentl Filed 07/08/21 Page 13 mm:
`13
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`re ect incoming funds from investment or brokerage accounts that would result from
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`\OOOflokh-bUJNr—a
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`NNNNNNNNNr—Ip—Ir—rr—Ap—iv—Av—Ar—ni—nn—AOOQOM-meh-‘OOOOQO‘xm-bUJNI—‘O
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`pr :fitable stock trades. Instead, the only significant source of funds coming in to
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`Pr fit Connect — over 90% of funds — came from investors.
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`67.
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`Instead of using investor money as represented, Profit Connect’s bank
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`fjords demonstrate that Defendants misappropriated the majority ofinvestor funds
`lough a variety of means, including the following:
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`1:
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`a.
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`over $3 million of investor funds was used to make payments to
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`
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`various promoters who solicited investors in Profit Connect using
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`their social media platforms;
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`approximately $1 million went to other individuals associated
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`with Profit Connect, including individuals who have been issued
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`credit cards in the name of Profit Connect;
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`as of April 12, 2021, J. Kovar had used at least $1.679 million of
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`investor funds for her own use, including for credit card
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`purchases, in—person cash withdrawals, and an automobile;
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`very recent bank records show that between April 21, 2021 and
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`June 9, 2021, J. Kovar made ten transfers of at least $120,000
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`each from the Profit Connect Investor Account to her own
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`personal bank account — for a total of more than $1.2 million in
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`less than two months;
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`over $250,000 went to charges for photography, apparel and a
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`charity related to B. Kovar;
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`at least $629,000 was used to repay other investors;
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`at least $440,000 was used to purchase a residential home in
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`January 2021 which B. Kovar facilitated by signing the grant
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`deed;
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`$1.6 million of investor funds went to make payments on a
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`number of different credit cards, including a credit card in the
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`Case 2:21-cv-01298-JAD-BNW Document 1 Filed 07/08/21 Page 14 of 29
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`l1 Case 2:21-cv-0129iD-BNW Documentl Filed 07/08/21 Page 14 of29
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`name of Profit Connect. These credit card charges included
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`almost $353,000 charged on the Profit Connect credit card
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`assigned to B. Kovar for expenses related to restaurants, grocery
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`stores, Amazon and Costco between June 9, 2020 and April 8,
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`2021. On April 2, 2021 alone, B. Kovar charged over $23,500 at
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`Costco.
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`68.
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`Because Profit Connect has Virtually no source of funds other than
`
`invéstors, the money misused by Defendants came almost exclusively from investors.
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`69.
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`Profit Connect’s bank records shows that none of the investor funds was
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`useE for investment purposes as represented by Defendants, including as represented
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`. Kovar on his YouTube Video or on the Profit Connect website. The following
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`two examples that show the flow of investor funds:
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`a.
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`In March 2021, the Profit Connect Investor Account received
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`$1,841,227.31 in deposits. At least $1,745,269.66 of the deposits
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`(94.7%) were from individuals who appear to be investors.
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`$90,648 of these deposits (4.9%) were from other individuals or
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`entities.
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`i.
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`The funds described above were used in the following
`
`ways:
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`1.
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`$568,637 (approximately 46%) was used to pay to
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`individuals associated with Profit Connect and
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`virtually all of this money — $519,400 — was paid to J.
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`Kovar;
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`2.
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`$172,340 (approximately 14%) was used to make
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`payments for credit cards;
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`3.
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`$67,657 (approximately 5%) was used to pay
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`individuals who appear to be investors; and
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`4.
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`$54,340 (approximately 4%) was used to make
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`by
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`are
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`KOOO\]O\Ul-bUJNr—n
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`NNNNNNNNNHHHl—‘D—‘b—‘HHHHWQQM-PWNHOKDOOQONU‘I-PWNF—‘O
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`Case 2:21-cv-01298-JAD-BNW Document 1 Filed 07/08/21 Page 15 of 29
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`Case 2:21-cv-0129‘D-BNW Document 1 Filed 07/08/21 Page 15 of 298
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`payments to those who promote Profit Connect to
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`investors.
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`On March 9, 2021, an individual who appears to be an investor
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`sent a wire in the amount of $193,000 to the Profit Connect
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`Investor Account with a reference stating: “Super Computer Seat
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`time.” As set forth below, there were no disbursements or
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`transfers that relate to investing activities from the date of this
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`deposit through March 31, 2021.
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`From March 9, 2021, when $193,000 was wired to the
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`Profit Connect Investor Account, through the end of March
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`2021, these investor funds were disbursed as follows:
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`1.
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`$458,000 was transferred directly to the personal
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`bank account of J. Kovar;
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`$200,000 was paid to an entity that provides
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`HVAC/plumbing services;
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`$134,237 was used to pay credit cards, including
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`those associated with the J. Kovar, B. Kovar and with
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`Profit Connect;
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`$44,400 was paid to other individuals;
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`$42,240 was paid to individuals who promote Profit
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`Connect to investors;
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`$24,333 was paid to individuals associated with
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`Profit Connect, including those who have received a
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`Profit Connect credit card for their use;
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`$10,000 was used to pay for legal services; and
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`$2,649 was used to make payments to individuals
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`who appear to be investors.
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`70.
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`In addition to being the only ones with signatory authority over the
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`Case 2:21-cv-OlZQB‘D-BNW Document 1 Filed 07/08/21 Page 16 of 29
`Case 2:21-cv-01298-JAD-BNW Document 1 Filed 07/08/21 Page 16 of 29
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`Prdfit Connect Investor Account, J. Kovar and B. Kovar were actively involved in the
`1
`2 molvement and misappropriation of investor funds. For example,
`3
`1
`a.
`The Profit Connect Investor Account was accessed on over 3,000
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`B:
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`1;
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`occasions between May 27, 2020 through at least April 11, 2021
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`through a logon ID that includes the name “jkovar” and, on at
`least 2,614 ofthose instances, the Profit Connect Investor Account
`was accessed through an intemet account in the name of “Joy
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`Kovar.”
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`b.
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`The Profit Connect Investor Account was accessed on over 23,000
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`occasions, from May 16, 2018 through at least April 12, 2021,
`using a logon ID named “profitconnect” and, on over 100 of those
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`instances, the Profit Connect Investor Account was accessed
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`through an intemet account in the name of “Profit Connect” that
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`listed “Brent Kovar” as the customer contact person.
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`c.
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`On at least 17 occasions between October 18, 2018 and July 7,
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`2020, J. Kovar made cash Withdrawals to purchase cashier’s
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`checks for a total of $428,905. Additionally, J. Kovar withdrew
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`over $72,000 in cash withdrawals from the Profit Connect
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`Investor Account, through teller and ATM transactions.
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`(1.
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`Some of the trans