Colorado Regulator Sues Lakewood Man Over Alleged $5.2 Million 'AI Trading' Investment Scheme

Published Nov. 9, 2026. Case status is current as of that date.

"Artificial intelligence" is the newest wrapper on an old promise: steady returns that beat the market. Colorado's top securities regulator says one Lakewood man used it to raise millions from friends, family and colleagues while his trading lost money. On Nov. 6, 2026, Colorado Securities Commissioner Tung Chan announced civil fraud charges against Michael Cole and his company, Sage Income LLC, both of Lakewood, Colorado, for securities fraud and unlicensed activity under the Colorado Securities Act [1].

Status: This is a civil complaint, not a criminal case. Everything below is an allegation by the state. No court has ruled, and Cole and Sage Income are presumed not liable unless a court finds otherwise. We found no criminal charges and no public response from Cole.

What the state alleges

According to the Colorado Division of Securities [1]:

• Cole allegedly solicited $5.2 million from 14 investors through promissory notes in Sage Income LLC.
• The company claimed to use proprietary AI software to trade securities that would generate returns of 9% to 15% a year, higher than average market returns.
• In fact, the complaint alleges, Sage had negative rates of return from November 2019 through December 2024.
• Cole allegedly told investors the AI software had historically been successful, "but that was not true."
• The complaint alleges Cole admitted to investigators that investor money was used to develop and train the AI software "through trial and error."
• Bank records allegedly showed Cole used investor funds to pay interest to earlier noteholders "in a Ponzi-like scheme."
• Cole is not licensed to offer or sell securities in Colorado, the release says.

"We believe that Mr. Cole used the promise of AI investing to defraud Coloradans, including his own brother, parents and colleagues," Commissioner Chan said in the release. "We have seen a lot of the same old scams that mask themselves behind the excitement of new technology like AI" [1]. These are the regulator's characterizations of its own allegations.

The state release does not name the court where the complaint was filed or give a case number. BusinessDen reported on Nov. 9 that the Division of Securities sued on Nov. 4, that Cole is a Lakewood radiologist whose investors included fellow radiologists, and that Sage Income is in Chapter 7 bankruptcy [2]. Those details come from BusinessDen and were not in the state's release; we have not independently confirmed them.

The defendants and their status

• Michael Cole, Lakewood, Colo. Sued civilly by the Colorado Securities Commissioner (securities fraud and unlicensed activity). No ruling reported. Age not stated in the release.
• Sage Income LLC, Lakewood, Colo. Sued civilly. Reported by BusinessDen to be in Chapter 7 bankruptcy (unconfirmed by state release).

Why "AI trading" pitches deserve extra scrutiny

Regulators across the country have warned that scammers borrow whatever technology is in the headlines: blockchain a few years ago, AI now. An "AI" label tells you nothing about whether a strategy works or whether the money is actually being traded. In this case, the state alleges the software was still being developed with investors' money, while investors were told it had a successful track record.

Promissory notes are another common feature. A note that promises a fixed annual return can look safer than a stock, but it is only as good as the business behind it, and notes sold to the public are generally securities that must be registered or exempt and sold by licensed people.

Red flags

These are general warning signs, not claims about any defendant beyond the allegations above.

• A fixed, above-market return (for example 9% to 15% a year) described as reliable.
• A "proprietary" AI or algorithm whose track record you can't see audited.
• The seller is a friend, relative or coworker, not a licensed professional.
• Returns arrive on schedule, but you can't see the underlying trades or accounts.
• The seller is not licensed with your state securities regulator or FINRA.

What to do if you're targeted

• Check the seller's license with your state securities regulator (find yours via NASAA) and on BrokerCheck.
• Ask for audited financial statements and independent custody of funds.
• Slow down. "If it's too good to be true, it usually is," the Colorado commissioner says [1].
• If you invested in Sage Income LLC, the Colorado Division of Securities asks you to contact it at Dora_SecuritiesWebsite@state.co.us or 303-894-2320 [1].

Case status (as of Nov. 9, 2026)

Defendant	Court	Status	Source
Michael Cole, Lakewood, Colo.	Court not stated in release (filed Nov. 4, 2026, per BusinessDen)	Sued civilly by Colorado Securities Commissioner for securities fraud and unlicensed activity (announced Nov. 6, 2026); no ruling; no criminal charges found	[1], [2]
Sage Income LLC, Lakewood, Colo.	Same	Sued civilly; reported in Chapter 7 bankruptcy (BusinessDen; unconfirmed)	[1], [2]

Statuses can change.

Sources

1. Colorado Division of Securities, "Press Release: Complaint Filed Against Lakewood, Colorado, Man for AI-related Investment Scheme," Nov. 6, 2026. https://securities.colorado.gov/press-release/press-release-complaint-filed-against-lakewood-colorado-man-for-ai-related-investment
2. BusinessDen, "Radiologist's Ponzi scheme took millions from other radiologists, state says," Nov. 9, 2026. https://businessden.com/radiologists-ponzi-scheme-took-millions-from-other-radiologists-state-says/

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