SEC Announces Emergency Action to Halt Ongoing Fraud...
The SEC has taken legal action against "an ongoing fraudulent offering of stock in a company called One Wall Street, Inc. in which the defendants have obtained over $1.6 million from at least 64 investors, most of them senior citizens."
According to the Securities Exchange Commission:
"The complaint alleges that from March 2003 until the present, the defendants raised at least $1.6 million from at least 64 investors -- mostly senior citizens -- who purchased unregistered One Wall Street stock. The complaint further alleges that to induce these sales, defendants made numerous oral and written false and misleading statements, including that One Wall Street would soon conduct an initial public offering, that E*TRADE Financial Corporation was negotiating to merge with One Wall Street, and that One Wall Street would use the investment proceeds for solely business purposes. In fact, according to the complaint, defendants have not pursued an IPO of One Wall Street, E*Trade has never engaged in any business discussions with One Wall Street whatsoever, nor did One Wall Street use investor proceeds in the manner the defendants represented.Rather than apply the proceeds collected from the investors towards legitimate business expenses, the complaint alleges that Jarvis used, and continues to use, investor funds to pay his personal expenses, including jewelry purchases, gambling and "adult entertainment" services, and payments for child day care, car loans and mortgages. He has also given investor funds to his wife and fellow defendants."
The SEC's complaint can be read here. What is interesting about this case, is that the defendants' are alleged to have used their company's bank account as their own "piggy bank". This by itself is a fraud, and one of the more easier frauds to uncover. But since the individuals being defrauded, the investors, are not client's of the fraud criminal's bank, the bank has no duty to monitor and report on these fraudulent transactions. Pity that.
Technorati Tags: wall street stock, securities exchange commission, senior citizens, initial public offering, investors, misleading statements, business purposes, fraudulent, merge, ipo, proceeds
