A Long Island-based cold-calling scam allegedly stole more than $10 million from clients
The Securities and Exchange Commission (SEC) recently brought charges against 13 defendants who allegedly operated two cold-calling investment scams in Long Island, NY. According to the complaint, the companies involved defrauded investors out of more than $10 million. The firms’ salespeople reportedly convinced clients to purchase a number of penny stocks while making a wide variety of outlandish and misleading claims about the investments themselves.
The telemarketing scam reportedly operated by artificially inflating the prices of penny stocks
SEC investigators report that the New York-based operation would aggressively sell one or more stocks to a large group of clients, promising that the stock would gain value rapidly in a short period of time. Meanwhile, the company’s owners had purchased their own shares of the penny stock, ready to dump at a moment’s notice. When the stocks did gain value due to the increase in purchases resulting from the company’s sales tactics, the company would sell the stock immediately. In this fashion, the fraudsters would gain a tidy profit, while the firms’ investors saw the value of the brokerage accounts drop to nearly zero along with their now-worthless stocks.
Scammers harassed, threatened, and emotionally abused vulnerable seniors in order to convince them to invest
Much like many fraudulent investment scams, company sales people allegedly used a variety of manipulative techniques in order to convince customers to buy penny stocks – and later, to frighten them away from asking questions about their unsuccessful investments. The SEC report says that one salesperson allegedly told a customer to commit suicide after he repeatedly called the company for information on his investments. The SEC also alleges that company salespeople falsely claimed that one of the stocks they were promoting was about to be acquired by the Walt Disney Company, and that the resulting acquisition would greatly increase the value of their investment.
Reuters report sheds more light on the scope and nature of the scam
According to a report from Reuters, the scam may in fact have been much larger in scope than the initial SEC press release indicated. The news source alleges that the fraud may have exceeded $147 million, and involved the promotion of companies including Grilled Cheese Truck, Inc. a food-truck company that the firms’ salespeople claimed would rapidly increase in stock value. It also allegedly promoted penny stocks for the companies including CES Synergies Inc., Hydrocarb Energy Corp, Intelligent Content Enterprises Inc., and National Waste Management Holdings Inc.
Additionally, Reuters reports that the company itself changed its name many times, possibly to avoid detection by the SEC, FINRA, and other financial enforcement groups. At the time of reporting, the firm’s name was My Street Research; it had previously been called Dacona Financial, Power Traders Press, and Trade Masters Co.
If you were a victim of this or any other scam or act of malfeasance by a financial professional, contact the Silver Law Group. Our attorneys are leaders in the field of securities arbitration and elder financial fraud. We represent individual and institutional investors across the United States who have lost money at the hands of a trusted financial advisor. Our services are provided on a contingency-fee basis, which means we are only compensated if there is a recovery of losses. Contact us for a complimentary consultation about your situation.