The Securities and Exchange Commission today charged an unregistered broker in Oceanside, Calif., with fraudulently selling purported stock in a medical device company and pocketing investors’ money.
The SEC alleges that Gregory Ruehle raised approximately $1.9 million from more than 100 investors but never delivered or transferred the securities as promised while using the money to pay gambling debts among other personal expenditures.
In a parallel action, the U.S. Attorney’s Office for the Southern District of California today announced criminal charges against Ruehle.
“We allege that Ruehle lied to investors, sent them phony documents to further his deception, and spent their money on living expenses and gambling,” said Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office.
According to the SEC’s complaint filed in U.S. District Court for the Southern District of California:
- Ruehle began his scheme as early as 2012, misrepresenting to investors in California and Minnesota that he would sell them his personally-owned securities in a La Jolla, Calif.-based medical device company called ICB International, Inc. He was a former consultant for the company.
- Ruehle, however, sold investors far more securities than he actually owned, and those he did own were not transferable. Ruehle never disclosed these facts to investors.
- Ruehle compounded his fraud by creating fabricated documents that he told investors were from the company.
- He disseminated fake company stock certificates purportedly informing the investor of the number of shares they owned in ICB.
- He transmitted the fake stock certificates with a letter falsely stating that the certificates had been transferred from Ruehle to the investor.
- Ruehle also fabricated and sent investors an additional document that served as a phony confirmation that his shares had been transferred to the investor. The document falsely appeared to be on ICB letterhead and signed by the company’s CEO.
The SEC’s complaint seeks a permanent injunction as well as disgorgement plus prejudgment interest and penalties against Ruehle, who is charged with violating the antifraud provisions of the federal securities laws and acting as unregistered broker-dealer. Investors can quickly check whether people selling investments are registered by using the SEC’s investor.gov website.
The SEC’s continuing investigation is being conducted by Matthew Montgomery and Robert Conrrad, and the litigation will be led by Gary Leung. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of California and the Federal Bureau of Investigation.