Securities Arbitration Lawyers BlogSEC Halts South Florida-based $4.8 Million Boiler Room Scheme Involving State Lottery Tickets
The SEC filed charges against a Pompano Beach, Florida-based company, its CEO and its top sales agent in late March 2017, accusing them of conducting a boiler room operation that bilked investors out of almost $5 million.
According to the SEC’s complaint, CEO David Gray and sales agent Joseph A. Vitale (CRD# 5223467), aka Donovan Kelly, were the primary figures in carrying out the scheme.
According to the complaint, the company, LottoNet Operating Corp. (“LottoNet”), purported to be in the business of facilitating the purchase of lottery tickets from lotteries in various states online.
From approximately July 2015 to the time of filing, LottoNet, Gray and Vitale sold shares of the company to the public. LottoNet sought to raise a total of $5 million according to its Regulation D filings. While the offering was only supposed to last a year, the offering continued past its deadline, according to the complaint.
Using a slew of unregistered agents, Vitale and Gray made numerous sales calls to solicit investors. The agents would advertise $8,500 per month in dividends on a $25, 000 investment, noting a 60 percent return as the worst case scenario.
In total, according to the complaint, Gray and crew solicited $4.8 million, Vitale personally soliciting $1.4 million of that amount, from 138 investors and misused or misappropriated over $2 million. Over the course of nearly two years, only $10,525.43 has been paid out to investors.
Vitale was previously registered with FINRA. In October 2010, FINRA permanently barred him from the industry, hence Vitale’s use of the alias Donovan Kelly. In January 2010, the state of Pennsylvania sanctioned Vitale for allegedly offering for sale an unregistered stock to at least one Pennsylvania resident in violation of Pennsylvania laws.
Vitale’s last place of employment was J.P. Turner & Company, L.L.C. (CRD# 43177) from 2008 to 2009 in Deerfield Beach, Florida. J.P. Turner, now unregistered, was part of the Cetera Financial Group network, and was notorious for peddling alternative investments.
Contact Our Firm if You’ve Lost Money
If you have invested with Joseph A. Vitale, Donovan Kelly or David Gray in LottoNet and have lost money doing so, you may be able to recover some or all of your losses. Our lawyers are experienced in recovering investor losses due to broker and brokerage firm misconduct through FINRA arbitration.
Silver Law Group represents the interests of investors who have been the victims of investment fraud. If you have questions about your legal rights, please contact Scott Silver of the Silver Law Group for a free consultation at ssilver@silverlaw.com or toll free at (800) 975-4345.