Firm Charged with Treating Vulnerable Older Investors as ATM Machines

December 18th, 2014
in econ_news

from the Securities and Exchange Commission

The Securities and Exchange Commission today charged a Staten Island, N.Y.-based firm, its former president, and two sales representatives involved in a fraudulent boiler room scheme targeting seniors to invest in speculative start-up companies.

Follow up:

The SEC alleges that Dwayne Malloy, Chris Damon, and Theirry Ruffin treated vulnerable older investors as their personal ATM machines. They cold-called names from a list they maintained at Premier Links Inc. and used high-pressure sales tactics to convince seniors to invest in companies purportedly on the brink of conducting initial public offerings (IPOs). They never disclosed to the investors that only a small fraction of the money would be transmitted to the promoted companies, and Premier Links diverted investor funds to other entities controlled by the sales representatives or other associates.

According to the SEC’s complaint filed in U.S. District Court for the Eastern District of New York, Premier Links has never been registered with the SEC as a broker-dealer as required under the federal securities laws to conduct this type of business with investors. Premier Links, Malloy, Damon, and Ruffin fraudulently obtained at least $9 million from more than 300 investors across the country by building a relationship of purported trust and confidence with them. In one particularly egregious example, Damon and Malloy spent months earning the trust of an elderly veteran in order to defraud him of $300,000. In many instances, investors were provided with misleading account statements showing the shares they purportedly purchased as being held for safekeeping in their Premier Links accounts while awaiting the promised IPOs. Yet transfer agent records for the relevant companies indicate that shares were never purchased for these investors. Investor money was simply stolen instead. Said Andrew M. Calamari, Director of the SEC’s New York Regional Office:

Premier Links was a boiler room operated by unscrupulous schemers who made their living by cold-calling seniors and inducing them to buy worthless stock as they stole their money outright.

In a parallel action, the U.S. Attorney’s Office for the Eastern District of New York today filed criminal charges.

The SEC’s complaint charges Premier Links, Malloy (who was company president from 2007 to 2012), Damon, and Ruffin with violating the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934 as well as the broker-dealer registration provisions of the Exchange Act. They also are charged with selling securities without a registration statement filed with the SEC. The complaint seeks disgorgement of ill-gotten gains and financial penalties among other remedies. The complaint also names several relief defendants for the purposes of recovering money from the scheme in their possession.

The SEC’s investigation was conducted by Joshua Newville, Peter Pizzani, Thomas P. Smith Jr., and Michael Osnato of the SEC’s New York Regional Office. The case was supervised by Amelia A. Cottrell, and the litigation will be led by Todd Brody. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Eastern District of New York and the Federal Bureau of Investigation.

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