California's Department of Corporations claims to have uncovered an investment scam masquerading as a full-body screening center developer. The department has filed a civil complaint in the Superior Court of Orange County against ScanTech Imaging and four other businesses, asking for injunctive relief and full restitution to investors, according to the department.
According to the Department of Corporations, ScanTech offered and sold units in an investment trust to develop and operate a medical imaging center in southern California from May 2001 to at least December 2001. ScanTech said that the outpatient clinic would utilize an Imatron ultrafast electron beam tomography system to provide coronary-artery and full-body scans, according to the Department of Corporations.
ScanTech had contracted with unlicensed broker-dealers and sales agents who used cold calling and "other boiler-room pressure tactics" to solicit investments in the unqualified, nonexempt securities, the department said. Investors were promised annual returns of 40% to 70%, with a 10-year return of 916%, according to the department.
The investors were also told that between 30% to 40% of the money raised by ScanTech would be used for marketing, commissions, and other front costs. However, the department said that at least 70% of the investment funds were used in this manner.
The department also said that sales agents failed to disclose to investors various administrative orders and criminal convictions of some of the boiler-room defendants. Although investors were told that the center would open for business during the last quarter of 2001 or early in the second quarter of 2002, ScanTech has not made any disbursements of the $1.3 million it received from approximately 76 investors to buy a body-scan machine or secure a site for the center, according to the department.
By AuntMinnie.com staff writers
July 11, 2002
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