Thirteen Charged in Miami Lakes and California Boiler Rooms Securities Fraud Scheme that Defrauded Over 700 Investors
Monday, September 26, 2016
A Miami grand jury indicted thirteen people for their participation in two telephone sales room (“boiler room”) fraud schemes that targeted investors throughout the nation and defrauded them out of approximately $23 million. The fraud schemes operated out of Miami Lakes, Florida, and Marina Del Ray, California.
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and Eric I. Bustillo, Director, U.S. Securities and Exchange Commission (SEC), Miami Regional Office, made the announcement.
Craig Sizer, 48, of Miami, Keith Houlihan, 48, of Boca Raton, Miguel Mesa, 56, of Miami Lakes, Charles K. Topping, 39, of North Bay Village, Anita Sgarro, 49, of Marina Del Ray, California, Jack Willard Sini, 57, of Miami and Boynton Beach, Juan M. Perez Ortega, 46, of Miami Lakes, Charles David Smigrod, 41, of Coconut Grove, Matthew William Wheeler, 32, of Miami, Martin Miller, 74, of Miami Beach, Jason David Hershberger, 39, of Fort Lauderdale, James Wayne Long, 60, of Miramar, and Shawna Leigh Lynch, 44, of Fort Lauderdale, were charged with conspiracy to commit mail fraud and substantive count(s) of mail fraud. Sizer, Houlihan, Mesa, Topping and Sgarro were also charged with a substantive count of wire fraud.
“Those who operate locally or from afar to target unsuspecting investors will continue to be prosecuted,” stated U.S. Attorney Wifredo A. Ferrer. “We implore the community to be cautious about solicitations that promise unsubstantiated returns and to report all suspected fraudulent schemes to law enforcement.”
“This group of cross country scam artists bilked hundreds of unsuspecting investors out of over $21 million dollars and will now be held accountable for their devious actions,” said George L. Piro, Special Agent in Charge, FBI Miami. “If you are an individual investor, exercise due diligence before you invest your first dime. Do not fall prey to fantastic claims from investment sales people. Ask yourself: Does it seems too good to be true? If the answer is ‘Yes,” then it probably is!”
“We allege that Sizer and Mesa fraudulently touted Sanomedics and Fun Cool Free stocks as profitable investments while in fact only Sizer and Mesa and the sales agents were profiting at the expense of investors, many of whom were seniors,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office.
The indictment charges two, overlapping mail fraud conspiracies involving the fraudulent sale of stock shares for two companies, Sanomedics International Holdings, Ince. (“Sanomedics”) and Fun Cool Free (“FCF”).
According to the indictment, from April 2009 to August 2015, Sizer, Houlihan, Mesa, Topping, Sgarro, Sini, Ortega, Smigrod, Wheeler, Hershberger, and Lynch used false and fraudulent claims to solicit investors throughout the United States to buy shares of stock in Sanomedics, a company that sold non-contact infrared thermometers for home healthcare and for dogs. In 2009, Sizer and Houlihan allegedly hired Mesa to run a boiler room that sold restricted shares of Sanomedics stock. Mesa and Sizer prepared scripts for the sales agents that worked under Mesa, in the telephone sales room. Mesa later hired Sgarro to operate her own boiler room in California, selling Sanomedics stock. Sizer and Houlihan also sold Sanomedics stock directly to investors. In order to conceal their true identities and to further the fraud scheme, several of the co-conspirator sales agents used false names and aliases. The sales agents used sales pitches that included several materially false statements, including, but not limited to, that: stock sales did not include commissions or fees; sales agents were compensated with stock or paid by the hour; the sales agents worked directly for Sanomedics; stock purchases were safe and secure; and famous and wealthy invididuals, such as a former CEO of Apple Inc., PepsiCo, and IVAX Corp., and the “Dog Whisperer,” were either heavily invested in the company or were company representatives. In truth, the co-conspirator sales agents worked for Mesa and Sgarro, not for Sanomedics. Approximately 80% of investor proceeds were used by the co-conspirators to cover commissions and fees. The co-conspirators were not paid by the hour and did not receive stock options, but were in fact paid hefty commissions. Additionally, there were no actual endorsements by celebrities or wealthy individuals. The investors relied on the fraudulent statements. As a result of the scheme, the co-conspirators defrauded over 700 people out of approximately $21 million.
The indictment also charges that from August 2014 to December 2105, Sizer, Mesa, Topping, Sini, Perez, Smigrod, Wheeler, Miller, Long, and Lynch used a fraud scheme, similar to the one described above, to sell shares of stock in FCF, a company that claimed to own a smartphone gaming portfolio with over 500 gaming applications. Mesa oversaw the boiler room that was utilized to facilitate the fraudulent scheme. The co-conspirators used false claims, including assertions that they worked directly for the company, to defraud over 70 other investors out of $1.5 million.
On September 26, 2016, the SEC filed similar civil charges against Sizer and Mesa in federal district court in Miami.
An indictment is only an accusation and a defendant is presumed innocent unless and until proven guilty.
Mr. Ferrer commended the investigative efforts of the FBI and the assistance of FINRA. Mr. Ferrer also that the SEC’s Miami Regional Office and Florida’s Office of Financial Regulation. This case is being prosecuted by Assistant U.S. Attorney Roger Cruz, and Trial Attorneys Rebecca D. Ryan and Kevin B. Hart from the Antitrust Division of the Department of Justice.