The Securities and Exchange Commission is charging ex-Samoyedic’s Inc. and Fun Cool Free Inc. founder Craig V. Sizer and boiler room operator Miguel Mesa with involvement in a $20M penny stock scam to bilk senior investors and others. At least 600 investors were allegedly victimized in the fraud. The two men have consented to partial settlements of the civil charges accusing them of violating broker-dealer registration and anti-fraud provision of federal securities laws. However, they are not admitting to or denying the claims.
According to the Commission, Sizer hired Mesa to draw in and bilk investors in both his companies. Mesa ran boiler rooms in California and Florida. Sizer gave Mesa pitch points for boiler room agents to use when selling stock shares. The points included alleged misrepresentations, including that investor money would go toward development and research but not toward commissions. Sizer also purportedly solicited investors by phone using the same misrepresentations and omissions to sell company shares.
Unfortunately, contends the regulator, the two men misappropriated about 90% of the money raised for their own enrichment and to pay the agents their sales commissions of 15-20%. Sizer is accused of using at least $3M on his own spending.
Mesa, who is accused of hiding the boiler room operation by making it seem as if he and his agents were employed by Fun Cool Free and Sanomedics, allegedly used his portion of the funds to run the boiler room, pay the commissions, and also on his own spending. The SEC said that Mesa acted as an unregistered broker when offering and selling shares to investors. It contends that Sizer knew this yet aided and abetted him in that role by hiring him.
As part of their settlements, Mesa and Sizer have agreed to a bar from future penny stock offerings. Sizer has consented to a bar from serving as a public company director or officer. There will be financial sanctions imposed.
Meantime, the U.S. Attorney’s Office for the Southern District of Florida has filed parallel criminal charges against the two men. According to the Sun-Sentinel, 13 people are facing federal charges in the $23M scam that purportedly took place between ’09 and ’15.
Please contact one of our elder financial fraud lawyers today to request your free case consultation. Shepherd Smith Edwards and Kantas, LTD LLP can help you determine whether you have grounds for a securities case.
The SEC Complaint (PDF)
13 accused of operating $23M telemarketing fraud, Sun-Sentinel, September 26, 2016