Articles Tagged with sec fraud

The U.S. Securities and Exchange Commission (“SEC”) has filed a civil lawsuit against a Palm Beach, Florida-based transfer agent and its owner for allegedly defrauding more than 70 investors out of more than $3 million by using “aggressive boiler room tactics” to sell worthless investment securities.

According to the SEC’s lawsuit, which was filed in federal court in New York, International Stock Transfer, Inc. (“IST”) and its sole owner, Cecil Franklin Speight, committed mail fraud and securities fraud by creating and issuing fake securities certificates to both domestic and foreign investors.  While orchestrating a group of “cold callers” who promised investors high returns or discounted prices, Speight and IST actually provided the investors nothing more than counterfeit foreign bond certificates and stock certificates, including some for a publicly-traded microcap company with no connection to IST.  Moreover, to cloak his scheme with an appearance of legitimacy, Speight and IST told investors to send their investment funds to two attorneys who would place the funds in their own bank accounts.  From there, however, the funds did not go to any issuers; instead, the funds went to IST, where Speight used the money to pay personal expenses, including purchases at Mercedes-Benz, Nordstrom, and Groupon.  In the course of this scheme, Speight allegedly stole more than $3.3 million, sporadically paying prior foreign bond fund investors with new investor money in classic Ponzi scheme fashion.

Speight and IST have agreed to settle the SEC’s charges, with Speight agreeing to be barred from serving as an officer or director of a public company, agreeing to be enjoined from participating in any penny stock offerings, and requiring Speight and IST to disgorge all of their ill-gotten gains.  Monetary sanctions will be determined by the Court at a later date, though Speight reportedly faces at least $3.3 million in restitution and a fine equal to double the investors’ losses.  Additionally, Speight has pleaded guilty to a criminal charge in a parallel action brought against him by the U.S. Attorney for the Eastern District of New York.  He faces up to five years in prison.