Among recent enforcement actions by the Securities and Exchange Commission were charges against a New Jersey man and his company in a pump-and-dump scheme; against a soccer club accused of penny stock fraud; and a bar against a hedge fund advisor for false statements that caused a fund to collapse.
Soccer Club Charged With Boiler Room Scam
The SEC has charged a Florida-based penny stock company with fraud and won a court-ordered asset freeze against Oxford City Football Club Inc.
According to the agency, Oxford City's CEO, Thomas Anthony Guerriero, used high-pressure tactics and a boiler room of salespeople to raise more than $6.5 million from naïve investors misled to believe the company was a thriving conglomerate of sports teams, academic institutions and real estate holdings when, in fact, the company was bleeding millions and making zero profits from its two lower-division soccer teams in the U.K.
Guerriero has been operating a classic boiler room scheme since at least August of 2013. Guerriero cloaked his operations in the guise of nominal legitimate businesses, through which millions of unregistered shares of stock were sold to investors who were lied to about the stock value and potential profits.
Guerriero's salespeople sold Oxford City stock to the public based on leads lists he bought from third parties. Guerriero himself wrote scripts for the salespeople, who worked under aliases. They "offered" prospective investors a limited-time deal to purchase Oxford City shares at a deep discount from the publicly quoted price — but in actuality, Guerriero controlled that price.
Guerriero claimed to record phone conversations with potential investors using a "verbal verification system" that supposedly tied the stock "transaction" to their Social Security number and birthdate. But all he actually did was hit a random button on the phone to sound as if a recording were being initiated. If investors later refused to pay, Guerriero would threaten them with lawsuits based on their "recorded" verbal commitment.
Investors were promised a 50-cents-per-share dividend within a year from Oxford City, when the company was actually losing millions annually and was legally prohibited from paying a dividend.
Oxford City supposedly had $100 million in real estate holdings, as well as owning a radio broadcast network that projected profits of almost $20 million. In actuality, Oxford City's total assets amounted to about $1 million and it never owned a radio station; it just bought an hour of air time a week.
It also claimed to own an online university, with students already enrolled, and projected profits of $495 million for the upcoming five-year period. No such university existed—nor did the students or revenue. In addition, Oxford City claimed it would earn more than $238 million over five years from existing and new sports-related facilities, when it owned no more than a minority interest in a lower division English soccer club, which generated a small amount of revenue but never turned a profit.
The SEC's investigation is continuing.
New Jersey Man and Company Charged in Pump-and-Dump Scheme
