Feds freeze assets of ‘The Income Store,’ allege $75 million ‘Ponzi-like scheme’

A federal judge has frozen the assets of an Illinois man and the company he ran under the name “The Income Store” after the U.S. Securities and Exchange Commission accused him of a “Ponzi-like scheme” that raised $75 million.

Not only has the business run by Kenneth D. Courtright III of Minooka allegedly become “unsustainable,” the SEC said money from the business was used to overpay on Courtright’s mortgage and to make private school tuition payments.

The SEC moved last month to freeze the assets of Courtright and his business, officially known as Todays Growth Consultant Inc., out of fear that the alleged scheme would continue until the business “collapses.”

“The reality is that TGC’s business model has not been successful,” SEC lawyer Robert M. Moye wrote in a 22-page complaint. “It is not in satisfactory financial condition. It is not able to perform its contractual duties under Consulting Performance Agreements. It is crumbling under its debt obligations.”

U.S. District Judge Charles Norgle ordered the asset freeze Dec. 30, records show. The case was unsealed Monday and was announced by the SEC Tuesday. Courtright’s lawyer declined to comment.

The SEC said Courtright and his business raised at least $75 million from more than 500 investors since January 2017. They did so by striking deals in which the business offered a minimum guaranteed rate of return on revenue generated by websites the business built or acquired for the investors.

However, the websites wound up generating just $9 million in advertising and sales revenue between January 2017 and October 2019, according to the SEC. In the same time period, Courtright’s business paid $30 million to its investors.

In what the SEC described as “classic Ponzi-like fashion,” the business funded the gap between revenues and investor payouts by striking more deals with investors.

Though the SEC said the business appeared to secure some loans in May, it allegedly mixed that money with investor funds and continued to use that money to pay its obligations.

Meanwhile, since January 2017, the business allegedly moved more than $1.5 million to Courtright’s personal bank accounts. Money from the business was also allegedly used to significantly overpay on the mortgage on Courtright’s home.

The feds say Courtright’s mortgage loan required principal and interest payments of $2,729 a month. However, his business allegedly wound up making payments on his mortgage between January 2017 and October 2018 that amounted to $3,000 — every week.

It also allegedly paid more than $12,000 in 2018 and $24,000 in 2019 to a private secondary school attended by members of Courtright’s family.

Courtright’s business announced a temporary moratorium on investor payouts “due to cash flow problems” on Dec. 13, according to the SEC. But it promised to resume those payouts in April. Meanwhile, the SEC said the business continued to raise money from investors as recently as November.