Six Florida residents are facing serious charges of fraud after bilking investors of nearly $21 million to fund a lucrative gaming application that never got off the ground and generated no revenue. Federal authorities say the scheme involved fraudsters from Broward and Palm Beach County bilking investors all across the country using telephonic communications, a process known as “boiler room trading”.
Boiler room trading involves the use of high-pressure tactics and cold calls with salespeople using language like “sure thing” and “once in a lifetime deal” to pressure investors into making fast decisions. In other words, it’s just a hustle with more overhead. The defendants are facing charges of mail and wire fraud plus conspiracy to commit both types of fraud. Given the amount of money stolen from the venture, they may be spending a significant amount of time behind bars.
Federal authorities claim that the crew sold worthless stock to a venture called “Social Vouncher.com, Inc.” Those selling the stock advertised the venture as a combination of online gaming and online shopping. The idea was to earn revenue from players’ purchases. Each of the defendants is alleged to have informed investors that their money would be going toward the development of this application. However, investor money was paid in a series of kickbacks to undisclosed parties. Money from these investments ended up being paid to a casino for the purposes of gambling.
The six are accused of making material misstatements to investors for the purpose of defrauding them of their money. At least some of the money was then used for personal purposes, including gambling. That fact was never reported to investors.
Fraud is a crime that requires guilty intent. In other words, someone must lie to someone else to acquire their money and then use the money for a purpose other than the one specified. In this case, the crew is accused of lying to investors about a business venture and then using their money for personal reasons.
Boiler rooms, while not overtly illegal, tend not to be reputable either. However, boiler rooms almost always violate the spirit of the National Association of Securities Dealers’ fair practices. On the other hand, they can be used for illegal purposes and are nearly never reputable. Most of those attempting to secure funding for their investments would not reach out to investors using cold calls. In some cases, it can be very hard to identify the fraud since boiler room tactics can be used to pressure potential investors into overpaying for certain securities. In this case, it was easy because there was no business at all.
Talk to a West Palm Beach Criminal Defense Attorney
If you’ve been charged with wire or securities fraud, the West Palm Beach criminal attorneys at The Skier Law Firm, P.A. can help defend you from the charges. Sometimes, it can be difficult to tell the difference between a venture that went belly-up and a venture involving material misstatements. Call our office today to discuss your situation in more detail and allow us to begin preparing your defense immediately.