Officers Of Fraudulent Investment Bank Face 62-count Indictment In Ipo Scheme
Attorney General Spitzer today announced a 62-count indictment of five individuals in connection with a nationwide scheme to defraud the public through the sale of private placement stock in worthless shell companies through Westminster Holdings, Ltd., a Wall Street boiler room operation purporting to be a Wall Street "investment banking firm".
Charged in the indictment are: Robert Moses, Ace Lyndon Moses, Donovan Douglas, Louis Bedinotti, and Richard Lacnagina. They face numerous charges, including Grand Larceny, Scheme to Defraud, Issuing a False Financial Statement and violation of the state's General Business Law.
"The defendants fraudulently represented themselves to be sophisticated and successful investment bankers to win the trust of unsuspecting investors," Spitzer said. "The sad fact is that most of these people will never see their money again," he added.
The indictment alleges that defendants fraudulently portrayed Westminster as an established investment bank with over 25 years of experience in sophisticated corporate finance transactions and induced investors to purchase shares in companies they claimed were privately-owned start-ups, which would soon complete a reverse-mergers or initial public offerings (IPO) from which investors would reap large short term returns.
In actuality, Westminster Holdings, Ltd. was a newly formed company run by Robert Moses, who was barred the securities industry in 1996. While working at Westminster, Robert Moses represented himself as his son, Ace Lyndon Moses, to conceal from regulators and investors the fact that the Securities and Exchange Commission had brought three enforcement actions against him, from 1995 through 1999, which resulted in the bar, and orders of restitution and fines totaling $1.5 million, of which none has been paid.
To perpetrate the fraud the victims were told that the investments had little or no risk, and were assured they could get their money back if the companies did not go public within a year. The defendants further pressured investors to withdraw money from their retirement and IRA accounts or to borrow money if necessary with promises of returns within 90 days. When the defendants' claims failed to materialize and investors demanded their money back as originally promised. The defendants sent investors false updates on their claimed mergers with and acquisitions of corporations in Antigua, China and Costa Rica, and provided investors with fraudulent prospectuses containing lengthy legal disclosures.
To date the Attorney General's office has identified at least $1.7 million in losses to investors over a two year period. The bulk of those monies were used by the defendants to support their lifestyles and to perpetuate the scheme.
The shell companies used by the defendants to carry out the fraud were identified as "Compclubcasino.com", "Westminster Holdings, Ltd." and "Manhattan South Insurance Brokerage, Inc." Investors from Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Iowa, Illinois, Indiana, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, North Carolina, Nebraska, New Jersey, New Mexico, Nevada, New York, Ohio, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Virginia, Utah and Washington.
Each defendant faces a maximum of 15 years in prison for each count of Grand Larceny in the Second Degree, up to 7 years in prison for each count of Grand Larceny in the Third Degree, up to 4 years in prison for each count of Grand Larceny in the Fourth Degree, up to 4 years in prison for each count of Scheme to Defraud in the First Degree, up to 4 years in prison for each count of violating General Business Law section 352 (C) (6) and up to 4 years in prison for each count of Issuing a False Financial Statement.
The charges against the defendants are mere accusations and the defendants are presumed innocent until proven guilty in a court of law.
The Attorney General thanks the Northeast Regional Office of the Securities and Exchange Commission, the Criminal Prosecution Assistance Group of the National Association of Securities Dealers Regulation, the Pennsylvania Securities Commission, the Oregon Department of Consumer and Business Services and the Arkansas Securities Department for their cooperation in this matter.
The case is being handled by Assistant Attorneys General George Tidona and William Estes of the Securities Fraud Unit of the Investment Protection and the Criminal Prosecutions Bureaus. Investigators Brenda Blasie and Milton Brand participated in the investigation.
For information on how to avoid financial fraud, refer to the Attorney General's web page at http://www.ag.ny.gov/consumer-frauds/investing.