Lakewood radiologist took $5 million in ‘Ponzi-like’ AI investment scheme, lawsuit alleges

Michael Cole, a radiologist in Lakewood, Colorado, has been sued by state regulators for allegedly running a Ponzi-like scheme that defrauded investors of more than $5 million through false promises of AI-driven investment returns.

The Colorado Division of Securities filed suit on November 4, 2026, against Cole and his firm Sage Income, which is now in Chapter 7 bankruptcy, for securities fraud and unlicensed trading. The lawsuit alleges that Cole convinced 14 investors—many family members and former colleagues—to invest a total of $5.2 million through promissory notes in Sage Income LLC, claiming the company used an AI algorithm to trade securities for higher-than-average returns.

According to the complaint filed in Denver District Court, Cole told investors their money would be used to trade stock in a fund he controlled, and that the AI software allowed him to generate superior market returns. For more than four years, he claimed the AI software had been extensively tested and the company was in good financial standing. But state attorneys described these statements as "flagrantly dishonest."

Cole created Sage Income LLC in September 2019, at which point he owed three former business partners, including two family members, $1.3 million after dissolving his previous company, Cole Capital LLC. Bank records show Sage Income consistently lost money each month from November 2019 to December 2024. Investment payments to investors were "funded not by trading gains but by cash injected into Sage either by Cole or by new investors in a Ponzi-like scheme," according to the complaint. Bank records also showed Cole transferred some money into his personal account and used the funds to pay off an unrelated loan. He told state investigators he used the investors' funds to develop and train the AI software.

By the time Sage Income filed for bankruptcy in February 2025, each investor had lost money, for a total of more than $3.9 million lost, according to the complaint. Cole works as a radiologist and is not licensed to offer or sell securities in Colorado.

"We are alleging that Mr. Cole used the promise of AI investing to defraud Coloradans, including his own brother, parents and colleagues," said Tung Chan, the state securities commissioner. "We have seen a lot of the same old scams that mask themselves behind the excitement of new technology like AI. We recommend that investors slow down and research before investing and remember that if it's too good to be true, it usually is."

The lawsuit seeks to recover the misappropriated funds and bars Cole from future securities-related activities in Colorado.