The founder of Next Level, a commodities trading fund that claimed to finance Colombian metals exports, has been arrested by US authorities and charged with allegedly stealing over US$50mn from 330 investors.
Paul Regan, who was CEO of Next Level and also operated Yield Wealth, was detained on September 4 and faces securities and wire fraud charges over both funds, which had promised high yields to retail investors.
According to an indictment, Next Level vowed “double-digit” returns from commodities trading, providing Colombian mining companies with capital and operational support in exchange for precious metals at discount prices. The fund said it would then sell the goods to international refineries at a profit.
Regan’s other fund, Yield Wealth, was presented as a healthcare investment vehicle, with investors told their money would be used to purchase Affordable Care Act policies and generate monthly payments.
Investors were promised yields of up to 15% from Next Level and 10.5% from Yield Wealth, with Regan claiming their funds were fully insured.
But according to the indictment, Regan made “materially false and misleading” statements and “misappropriated” the funds for unrelated purposes, leading to significant losses for investors.
“Regan promised high returns but, in reality, he simply used money from new investors to pay off old investors, keeping the fraud going until pointed questions were asked,” says Jay Clayton, US attorney for the Southern District of New York.
“There is no place in our markets for scammers, particularly those who prey on Main Street investors,” he adds.
More than US$22mn of investors’ money was diverted to bank accounts held by an electronic goods broker and a pet products retailer, claims a separate suit brought by the Securities and Exchange Commission (SEC) against Regan last week.
“From these accounts, the majority of investor funds were sent overseas via wire to dozens of companies purporting to be in the import/export business, many of which were based in China,” the SEC claims.
Investors’ cash was also used to pay law firms, insurance brokers that had been employed to promote the securities, as well as investors in “the nature of a Ponzi scheme”, the SEC alleges.
The suit follows an investigation by the Wall Street Journal last year, which had focused on firms offering disproportionately high interest yields in a declining interest rate market. Within months of its reporting, brokers effectively stopped offering the securities, and the fund collapsed in late 2024. Soon thereafter, Regan stopped communicating with investors, the SEC states.
Key to Next Level and Yield Wealth’s marketing strategy was the claim that their assets were low-risk and fully insured.
In an offering document, Regan described Next Level’s physical trading transactions as “highly liquid, fully insured, and guaranteed investment opportunities”, the SEC filing shows.
“Regan further stated the company ‘originates and monitors trade finance in precious metals to support local suppliers’ and ‘export[s] their production to international markets through [Next Level’s] bespoke physical trading/operational platform,” it adds.
The filing further reveals that neither of the funds was covered by insurance, and questions have since emerged over Regan’s legal history.
Regan – a US citizen who was believed to be living in Colombia – was barred from associating with members of the Financial Industry Regulatory Authority (Finra) in 2004 and pleaded guilty to organised fraud in Florida in 2017.
While Next Level Holdings has operated as a Florida limited liability company since 2016, the SEC says it was never registered with the commission, and another individual – not Regan – is listed as its sole agent.
He also faces legal action from insurance providers that claim they are not liable for the failed investments.
Regan could not be reached for comment. Court records did not list an attorney for him at the time of publication. GTR has requested comment from the assistant attorney general.
Separately, Colombian surety bond provider Afiancol sued Next Level and Regan last year for alleged forgery.
Afiancol initially provided surety bonds to Next Level in 2023, backstopping investments of around US$7.7mn, but by the end of the year, the relationship was terminated and the bonds expired, its filing shows.
“In November 2024, Next Level collapsed. As a result, Next Level’s investors have pursued Afiancol to enforce the expired guarantees that Next Level forged by submitting written claims,” Afiancol’s filing reveals.
Afiancol alleges it was the victim of “trademark infringement, copyright infringement, deceptive trade practices”, urging the courts to prevent further forgery and to provide monetary relief for the harm suffered.
