Havasu man accused of running alleged Ponzi scheme arraigned
LAKE HAVASU CITY – A Lake Havasu City business owner appeared in court on charges stemming from his alleged involvement in a Ponzi scheme.
Steven LeProhon Marine and Motorsports owner Steven A. Leprohon, 30, now awaits trial on six counts of fraud, six counts of theft and one count of theft of a motor vehicle after his May 10 arrest. After four years in business at 1525 Industrial Bvd., LeProhon’s company has closed amid the allegations.
According to the police report, LeProhon’s arrest came after officers received six felony complaints against him, the first of which allegedly occurred Oct. 13, 2017.
LeProhon allegedly accepted tens of thousands of dollars from boat owners in exchange for repairs and equipment installations that were never completed. According to the police report, LeProhon on one occasion may have in fact removed parts from a victim’s boat for sale to potential buyers without the victim’s knowledge or permission.
In another reported instance, police say LeProhon accepted $17,000 for engine work to a deck boat that was never performed. According to the police report, the victim discovered parts installed on his or her boat that may have been stolen or removed from other watercraft.
According to police, LeProhon may have sold a customer’s off-highway vehicle without its owner’s permission to a California buyer. The sale was brokered by friends of LeProhon’s, through which police say LeProhon was paid about $47,000. The whereabouts of that vehicle were unknown at the time of LeProhon’s arrest, the report said.
This April, LeProhon was reported to have worked on one victim’s engine repeatedly over a three year span. In that time, the engine broke down repeatedly, the report said, on one occasion leaving the victim and his family stranded. Most recently, the report said, LeProhon received $10,000 up front to repair the victim’s engine, only to sell that engine for parts.
According to the report, LeProhon never returned the victim’s money or replaced the victim’s engine. He was reported to have told victims to “take him to court.”
Two complaints have been filed against LeProhon’s motorsports company within the past three years, according to the Better Business Bureau. No response to either dispute was given by LeProhon, BBB records show, and his company maintained an “F” rating from the organization as of this month.
During an interview with Lake Havasu City Police detectives last month, LeProhon allegedly admitted to using money paid by one customer to complete work for other customers. According to the police report, the investigation into LeProhon’s business practices over the past year showed that he has consistently collected money from customers up front, and then failed to complete work, or did not do so in a timely manner, ultimately leaving his customers at a financial loss and with no finished product.
LeProhon was released from custody June 11 under $20,000 bond. He is next expected to appear July 8 in Mohave County Superior Court for a pre-trial conference.
He has entered a not guilty plea, and will be represented by the Mohave County Public Defender’s Office.
According to the U.S. Securities and Exchange Commission, signs of a Ponzi scheme include an inability by customers to review information in writing about their investment, and difficulty in receiving payment or services rendered.
A successful Ponzi scheme ends only when the operator abruptly leaves his or her place of business and takes all of his or her customers’ invested money with them, according to a 2012 report by the commission. Barring success, however, Ponzi schemes typically implode due to a number of factors including the intervention of law enforcement.
According to the Securities and Exchange Commission, such schemes often collapse due to their intrinsic need for a continuing revenue stream. When customers or investors become fewer, an operator will no longer be able to provide services or returns as promised.
LeProhon’s arrest followed that of fellow Havasu business owner Tim McDonald, who was arrested less than a year prior under similar circumstances. McDonald now awaits trial of his own on charges including more than 20 counts of theft and one count of fraud.