The Billings Outpost

Funky Shark to pay fine

HELENA – Bozeman resident Scott Wacker and his company, Funky Shark, have been fined $40,000 for illegally selling investment opportunities, according to a news release from Commissioner of Securities and Insurance Monica J. Lindeen.

Wacker also agreed to pay back more than $834,000 to investors to resolve a restraining order Lindeen’s office filed against him in October. The restraining order stopped Wacker from soliciting new investors or spending any of the investment money he had already raised.

Last September, Wacker began recruiting investors for his penny-auction website, FunkyShark.com. By the end of October, Wacker had raised more than $1 million from investors across the world.

The flurry of transactions in Wacker’s personal and business accounts led his bank to file a suspicious activity report, which was referred to Lindeen’s office. After reviewing the report, investigators suspected Funky Shark was a pyramid scheme and requested a restraining order to prevent additional investors from getting involved.

On Oct. 30, Wacker posted a notice on Funky Shark’s website explaining that its investment program “may violate certain securities laws in the United States.”

In the two months it operated, Funky Shark paid nearly $378,000 in commissions to participants who recruited new members.

Those commission payments left Funky Shark unable to repay all of its participants in full, so Wacker agreed to pay $270,000 out-of-pocket to make investors whole.

“Mr. Wacker stepped up to the plate and repaid his investors,” said Lindeen.  “Often when we handle these types of cases, there’s simply no money left to repay participants. But for a number of reasons, this case is unique. Mr. Wacker didn’t understand what he was getting into, and he has expressed his commitment to setting things right.”

In August, Lindeen’s office issued a consumer alert about a penny auction pyramid scheme called ZeekRewards. More than 1,200 Montanans had invested $3 million in that scam before the Securities and Exchange Commission shut it down.

Copyright 2012 Wild Raspberry Inc.

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