According to prosecutors, criminal charges have been brought against 14 people over their alleged involvement in a $14.7M investment scam that primarily targeted older investors. The US Attorney’s office alleges that between 1/2014 and 1/2017 the defendants and others sought to defraud the investors and prospective investors of certain companies by attempting to artificially manipulate the volume and price when shares were traded.
The group allegedly hid that they were behind the rigging of these companies’ shares through a pump-and-dump boiler room scam. They are accused of manipulating share trading pattens while aggressively soliciting senior citizens by phone to try and persuade them to buy the shares.
When their targets showed a willingness to buy the stock being solicited to them, the boiler room employees would allegedly pressure them to buy, sometime even charging them subscriptions so that they could receive future stock recommendations. Investors were not notified that the employees and others they conspired with had sold their own shares in these companies.
Four of the defendants, including Jeffrey Chartier, Stephanie Lee, Lawrence Isen, Erik Matz, and Ronald Hardy are also accused of laundering over $14.7M of the proceeds from the scam.
SEC Files Charges In Senior Investor Boiler Room Fraud
Meantime, the US Securities and Exchange Commission has brought related civil charges against 13 individuals in what it calls a “massive telemarketing boiler room scheme.” The regulator contends that more than 100 people were bilked of over $10M, many of them older investors.
According to the regulator, the fraudsters operated boiler room-style call centers through which hundreds of thousands of “threatening and deceitful” cold calls were used to pressure targets into buying penny stocks. Telemarketers, who were employees of My Street Research in New York, would instruct victims to make trades, including how many shares to buy and what to pay for them.
The boiler room sales team would then allegedly make opposing sell orders that involved dumping their own shares. As a result, they purportedly made over $14M in illegal proceeds even as investors lost millions of dollars.
Victims were allegedly harassed with violent threats, including one sales representative accused of telling one investor, who complained about investment losses, that he should kill himself.
Already investors have brought complaints seeking to recover their losses from this senior investor fraud. (It should be noted that while the regulator is claiming that investors suffered $14.7 million in losses, many of the news headlines on this story are describing the fraud as a $147M boiler room scam.)
Senior Investor Fraud
Older investors, especially retirees, can find themselves in disastrous financial situations should they become the victims of fraud. For many investors who are no longer bringing in income, there may not be a way to earn more funds or regrow their savings or retirement fund.
At Shepherd Smith Edwards and Kantas, LTD LLP, our securities fraud law firm is familiar with the complications that may arise being a senior investor who has lost their money because of securities fraud. Contact our elder financial fraud attorneys today.
Read the SEC Complaint (PDF)
Feds Crack Down On $147M Boiler Room Scheme, Law360, July 12, 2017