Florida Man Settles SEC Charges Arising from “Boiler Room” Scam
On August 21, a West Palm Beach resident agreed to settle charges brought by the U.S. Securities and Exchange Commission over his alleged operation of a “boiler room” fraud which reportedly scammed investors out of more than $1.5 million. According to a complaint filed by the SEC with a federal court in Philadelphia, Moshe Y. Dunoff “played a central role in this fraud,” operating a number of fictitious entities designed to convince investors of the legitimacy of the scam. Dunoff consented to the entry of a judgment against him, although he did not directly admit or deny the SEC’s allegations. This is not the first enforcement action against Dunoff, as state securities regulators in Maryland and Illinois previously cited him in administrative actions arising from the same set of facts.
SEC v. Dunoff
As described by the SEC’s complaint, Dunoff and “others located in Southeast Asia” operated a boiler room that made unsolicited calls to prospective investors in at least 14 countries. The callers claimed to work for the Chicago-based broker Gruber and Green, Inc. In reality, the SEC said no such brokerage ever existed.
Nevertheless, the “Gruber and Green” representatives claimed they were selling “common stock in public companies at substantial discounts.” The SEC identified 58 investors who fell for this pitch. Investors were directed to transfer funds to one of two entities—Interast or Trans World—which, again, the SEC said were sham entities controlled by the schemers. The SEC said Dunoff opened bank accounts in Florida for both entities to “conceal the fraudulent scheme,” and that once funds were deposited in said accounts, “Dunoff kept a portion of the proceeds for his own benefit,” and redirected the remaining funds to other accounts.
The SEC said none of the investor funds were actually used to purchase securities. For example, the SEC said a “Gruber and Green” representative told one unidentified investor he could purchase a listed public security for an “institutional discount.” Based on this statement, the investor transferred over $200,000 to bank accounts controlled by Dunoff and his co-conspirators. The investor never received any stock or got his money back.
Under the terms of the judgment agreed to between the SEC and Dunoff, a judge will determine how much Dunoff will have to pay in disgorgement, civil penalties and prejudgment interest. Dunoff has waived his right to challenge any such penalties. He is also permanently enjoined from violating any federal securities law. No other individual was named in the SEC’s complaint, although the judgment applies to any agent or employee working for Dunofff.
Avoiding Boiler Room Fraud
Investors should always be skeptical before answering unsolicited calls offering investment opportunities. Like the case described above, such unsolicited calls are often the sign of boiler room fraud. If someone you don’t know tries to sell you public at a “secret” or offers a “can’t miss” investment, the odds good are you are the target of a scammer. If you have been the victim of such a boiler room scam and need advice from an experienced Florida stockbroker fraud attorney, contact Gregory Tendrich, P.A., in Boca Raton right away.