May 10, 2005
Columbia, Mo. — Attorney General Jay Nixon has obtained a temporary restraining order against a Columbia company that took investors' money with promises of big returns — but instead left them with nothing.
In an order signed on Friday (May 6) by Boone County Circuit Court Judge Gene Hamilton, Vertical Group LLC — which also does business as Cerberus Inc. — must immediately cease the advertising, soliciting or sale of any investment opportunity. Specifically under scrutiny in the lawsuit filed by Nixon are so-called standby letters of credit, where Vertical Group representatives took hundreds of thousands of dollars and promised returns of up to 1,000 percent over the course of just a few months. Not only did investors fail to receive those returns, they lost their principal as well.
Neither Vertical nor any of its employees are licensed to sell securities in Missouri. A representative of the U.S. Securities Exchange Commission has said that standby letters of credit "do not exist as legitimate financial instruments."
"Investor fraud can be particularly egregious, as sometimes individuals can lose their homes, their life savings, and even the ability to care for themselves," Nixon said. "We wanted to move quickly to shut this operation down, then go to work to recover the funds that investors tendered in good faith."
A search warrant was executed by the Federal Bureau of Investigation last week in connection with the solicitation of standby letters of credit. Nixon's office has learned of at least four individuals who collectively invested $575,000 in those instruments. One couple, who invested $50,000, was promised a $10 million return after the letters had been traded for 14 months. Vertical Group, 3210 Bluff Creek Drive, has been doing business at least since October 2004.
Also named in the restraining order are the officers and employees of Vertical, all of Columbia:
Nathan Reuter, 4509 Woodberry Court
Daryl Brown, 3509 Cross Timbers
Rickey Williams, 4003 N. Riveria
Bud Woffordm, New Bloomfield, Mo.
Nixon has also asked the court to order full restitution to all investors, civil penalties and reimbursement for the cost of investigation and legal action. A hearing on a preliminary injunction has been set for May 20 in Boone County Circuit Court.