A Lakewood radiologist built an investment business pitching an artificial intelligence trading algorithm that he claimed would beat the market year after year. Instead, according to a civil complaint from Colorado securities regulators, the fund lost money every single month for five straight years while the doctor allegedly used fresh investor cash to keep paying off earlier backers.
Regulators Allege a Ponzi-Like Pattern Behind the AI Pitch
The Colorado Division of Securities alleges that Michael Cole, a radiologist, fraudulently took more than $5 million from investors in an AI investment scheme and failed to deliver the promised returns, according to court filings reported by The Denver Post. Cole created Sage Income LLC in September 2019 and told investors their money would be used to trade stock in a fund he controlled, the complaint alleges. He is not licensed to offer or sell securities in Colorado, according to state officials cited in the filing.
Cole allegedly convinced 14 investors to put in a total of $5.2 million through promissory notes in Sage Income, according to the lawsuit, which the Division of Securities filed against him in Denver District Court on November 4, 2026. Yellow Scene Magazine reported that the commissioner filed the civil fraud charges on November 6, 2026, a discrepancy in reported filing dates that has not been resolved. Cole told investors the AI software had been extensively tested for more than four years and that Sage Income was in good financial standing, the complaint states, and he claimed the software enabled trades generating higher-than-average market returns.
Negative Returns Every Month for Five Years, Complaint Says
Yellow Scene reported that Sage promoted its proprietary AI software as a securities-trading program capable of generating annual returns between 9% and 15%. Instead, the complaint alleges Sage Income consistently lost money every month from November 2019 through December 2024. State attorneys described Cole's statements to investors as flagrantly dishonest, according to the complaint.
Rather than trading gains, Sage Income funded investor payments with cash injected by Cole himself or by new investors, the complaint alleges — the same pattern Yellow Scene described as Cole using investor funds to pay interest to earlier noteholders in what the publication characterized as a Ponzi-like scheme. The complaint further alleges Cole transferred some investor money into his personal account and used investor funds to pay off an unrelated loan. He told state investigators he used investor funds to develop and train the AI software, according to the filing.
Separately, Radiology Business reported that Cole's personal notes referenced an algorithm error in November 2024 that led to significant losses in about 95% of Sage's accounts. Sage Income filed for bankruptcy in February 2025; its case is listed on PACERMonitor. By the time of the bankruptcy filing, investors had lost more than $3.9 million in total, according to the complaint.
A Trail of Debt From an Earlier Venture
Before Sage Income, Cole ran Cole Capital LLC with three former business partners, two of whom were members of his own family. The complaint alleges Cole owed those three former partners a combined $1.3 million after Cole Capital was dissolved in 2019 — debt that predated the launch of the fund regulators now say he used to pay off earlier obligations with new investor money.
Colorado Securities Commissioner Tung Chan said Cole used the promise of AI investing to defraud Coloradans, including his own brother, parents and colleagues. “We have seen a lot of the same old scams that mask themselves behind the excitement of new technology like AI,” Chan said, urging investors to slow down and research before putting money into anything. Chan recommended remembering that if an investment seems too good to be true, it usually is.
Cole could not be reached for comment this past Saturday, according to the Post's reporting. The allegations outlined in the state's complaint have not been proven in court, and the case's current status, along with any potential restitution, was not detailed in available filings.
Part of a Broader Pattern Around AI-Branded Investments
The Lakewood case echoes a wider wave of scrutiny around investment pitches that lean on artificial intelligence branding. The U.S. Securities and Exchange Commission announced charges in a separate matter involving online platforms where investors were told their funds would rent AI-programmed trading bots, with some defendants also promising payouts for recruiting new investors. In another unrelated action, the SEC previously charged two investment advisers over false or misleading statements about their use of artificial intelligence. Neither case is connected to the Colorado complaint against Cole, but both reflect regulators' growing focus on AI as a selling point in investment fraud.
