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Ex-Broker Gets 7 Years in Prison Over $2.4M Scam Targeting Older Clients

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What You Need to Know

  • An ex-broker in Florida was sentenced to 87 months in prison and three years of supervised release.
  • The judge also ordered him to pay $2.97 million in restitution.
  • He had spent $1.3 million of clients' funds on gambling, jewelry, luxury cars, home mortgage payments, private school tuition and other personal items.

A judge sentenced an ex-broker to over seven years in federal prison on Thursday for directing a fraud scheme in which he sold stock in his Florida tech firm to clients across the U.S., and then misappropriated their funds for his own use, according to court documents, Juan Antonio Gonzalez, U.S. Attorney for the Southern District of Florida, and George L. Piro, special agent in charge of FBI Miami.

In addition to sentencing Isaac Grossman, 47, of Parkland, Florida, to 87 months (7.25 years) in prison, U.S. District Judge Raag Singhal ordered the ex-broker to serve three years of supervised release after prison and to pay $2.97 million in restitution, according to a sentencing document filed on Friday in U.S. District Court for the Southern District of Florida in Miami.

Grossman previously pleaded guilty to wire fraud, mail fraud and money laundering charges, with each count earning him a sentence of 87 months to be served concurrently.

The ex-advisor had spent $1.3 million of the clients’ money on gambling, diamond jewelry, luxury cars, home mortgage payments, tuition payments for his children’s private school education, and other personal expenditures, according to the indictment against him that was filed on Oct. 10, 2019.

Purchases included a McLaren MP4-12C, a Chevrolet Corvette, and a 4.81 carat diamond ring, Gonzalez and Piro said.

Grossman’s Fantasy Internet App

From September 2014 through April 2018, Grossman raised about $2.4 million in investor funds for his company, Dragon-Click Corp., by soliciting investments from 26 retirees across the U.S., according to the indictment.

Grossman told potential investors Dragon-Click was developing an internet application that would revolutionize online shopping by allowing a user to upload a photograph of any item the user wanted to buy, identify all retailers offering that item for sale, provide price comparisons for the item across retailers, and provide a link to retailers’ websites where the user could buy the item, the indictment said.

He solicited funds by falsely telling potential investors they would double, triple or quadruple their investments, and that Dragon-Click was on the verge of being sold to a large tech company such as Amazon, Apple or Google for more than $1 billion.

Grossman concealed from investors that, before raising funds for Dragon-Click, he had been permanently barred by the Financial Industry Regulatory Authority from acting as a broker-dealer or associating with any broker-dealer firm in 2012, according to his report on FINRA’s BrokerCheck website.

The last firm for which Grossman was a registered rep was Basil Financial, a company that was expelled by FINRA in 2012. In fact, FINRA expelled seven of the 12 FINRA-registered firms he worked for during his 12 years as a FINRA-registered broker, according to BrokerCheck.

He also concealed that he had been permanently banned from commodities trading by the Commodity Futures Trading Commission, according to the indictment.

Grossman falsely told clients their investment funds would be used to complete the technological development of the Dragon-Click app, to pay legal fees related to the patent application process, and to close the sale of the application to a large tech firm. But he misappropriated their funds for his personal use, the indictment said.

SEC Halted Scam

Earlier, Grossman was named in a complaint  filed by the Securities and Exchange Commission in June 2018 in U.S. District Court for the Southern District of Florida.

The SEC obtained a court order halting the scheme and the court also approved an emergency asset freeze.

In addition to Grossman, also named as defendants in the SEC complaint were Dragon-Click Corp.; Adriana Grossman, his wife; and Dragon Management, her unregistered investment advisor.