The Securities and Exchange Commission charged a former registered representative with defrauding his brokerage customers out of nearly $4 million in a long-running investment scam.
John Maccoll, who was affiliated with the Birmingham, Michigan, branch office of UBS, used high-pressure sales tactics to solicit at least 15 of his retail brokerage customers to invest in what he described as a highly sought-after private fund investment, according to an SEC complaint. The fraud lasted from approximately 2008 to March 2018.
Most of the injured customers were elderly and retired and invested through their retirement accounts. According to the SEC, “Maccoll had long-standing relationships with these customers, who trusted him completely to manage their investments.”
The customers Maccoll targeted held tax-advantaged retirement accounts at UBS, including IRA accounts, a pension fund conversion, and a federal government Thrift Savings Plan account rollover. One account included the customer’s life savings and money from her deceased husband’s life insurance payout, which she intended to use to pay for college expenses for her three children, according to the SEC.
“Maccoll knew that the funds invested in his customers’ accounts were intended for their retirement and for college expenses,” the complaint states.
Maccoll told his customers that the purported fund investment would allow them to diversify their portfolios, receive annual investment returns as high as 20%, and give them investment growth potential that was better than the growth they received in their brokerage accounts.
As alleged in the complaint, Maccoll’s statements to his customers were false — he did not invest the customers’ money but stole it for his own personal use.
As a result of Maccoll’s false and misleading statements, at least 15 customers transferred nearly $4 million to Maccoll. According to the SEC, Maccoll used some of the funds to make Ponzi-like payments to at least six of his customers, and the rest he used for his personal benefit.
To conceal the scheme, Maccoll allegedly instructed his customers not to tell others about the purported fund investment, provided some of his customers with fake account statements reflecting fictitious returns, and paid over $400,000 in Ponzi-like payments to certain of the customers to keep the scheme alive.
However, by April 2018, he had less than $7,000 remaining in his bank accounts, the SEC says.
The SEC is seeking a judgment ordering Maccoll to disgorge his ill-gotten gains with prejudgment interest and to pay civil penalties. The U.S. Attorney’s Office for the Eastern District of Michigan has filed criminal charges against Maccoll.
SEC Charges Cloud Communications Company and Execs With Misleading Revenue Projections
The SEC charged a cloud communications company and two executives with providing misleading quarterly revenue estimates. The company and executives agreed to pay more than $1.9 million in penalties to settle the SEC’s charges.
According to the SEC’s order, Sonus Networks Inc.’s former CFO, Mark Greenquist, was aware of red flags that undermined the company’s first-quarter 2015 revenue estimates.
These red flags included that Sonus had pulled forward deals initially projected to close in 2015 in order to achieve its revenue guidance for the fourth quarter of 2014. Despite recognizing these risks, Greenquist said in a press release that he was comfortable with the consensus analyst revenue estimate of $74 million for the first quarter. About six weeks later, the company issued guidance of $74 million which reflected certain forecasted sales that had been improperly reclassified, due to pressure from Michael Swade, Sonus’s Vice President of Global Sales, in order to support the $74 million estimate.
Seven days before the close of the quarter, Sonus announced that it was lowering its first-quarter revenue estimate.
The SEC ordered Ribbon, Greenquist and Swade to pay penalties of $1.9 million, $30,000 and $40,000 respectively.
SEC Charges South Florida Individuals and Entities in EB-5 Investment Scheme
The Securities and Exchange Commission charged two Florida residents in a securities offering fraud targeting immigrant investors.
According to the SEC’s complaint, over a period of more than two years, Joseph Walsh and Robert Matthews defrauded dozens of foreign investors participating in the EB-5 program administered by the U.S. Citizenship and Immigration Services, which provides foreign nationals with an opportunity to qualify for permanent U.S. residency by investing in domestic, job-creating projects.
According to the SEC’s complaint, Walsh raised close to $44 million from foreign investors which, through a loan, was to be used to acquire, develop, and operate a Palm Beach hotel controlled by Matthews.