SEC: New York Pitchman, 73, Hawked ‘Illegal Offering’ For Murdoch Security & Investigations Inc. By Spinning Tall Tale Of ‘Anti-Piracy’ And ‘Anti-Terror’ Success On The ‘High Seas’

EDITOR’S NOTE: In the past 24 hours, the SEC has filed charges against two firms purportedly in the business of preventing terrorism. Read the PP Blog’s story about the first firm here.

The cavalcade of senior citizens implicated in securities schemes continues — as does the story about the bizarre nature of recent fraud cases in the white-collar arena.

Robert Goldstein, 73, of New York City, has been accused in federal court by the SEC of orchestrating a $1 million offering fraud for Murdoch Security & Investigations Inc. (MSI), a firm that allegedly placed ads in the Wall Street Journal last year promising “repayment of principal plus 22 percent interest per year.”

MSI also placed ads in Barron’s and Investor’s Business Daily for its securities, which were unregistered, the SEC said.

Goldstein was MSI’s senior vice president. His 53-year-old boss — Connecticut-based MSI CEO William C. Vassell — also has been accused by the SEC of orchestrating the alleged offering fraud.

But advertising in prominent publications to drive business to the firm was only part of the scam, the SEC said. Lying to customers who responded to the ads also drove the fraud, the agency alleged.

Described by the SEC as MSI’s “primary salesperson,” Goldstein “provided investors with a wide array of false and otherwise misleading information in an effort to sell the 22% Notes,” the agency said.

The falsities included “statements about the Company’s revenues, existing assets and overseas operations,” the SEC alleged.

Investors were told tales of fabulous success in Mexico, fantastic revenues for 2010 and the company’s “explosive” growth potential. And, according to the SEC, Goldstein spun a yarn that MSI’s “anti-piracy” and “anti-terror” business was “probably one of the largest … on the high seas” in 2011 and “that such business, including in Somalia and Yemen, was expected to yield $100 million to $300 million in revenue for MSI in subsequent years.”

In reality, the SEC said, “MSI’s internal documents reflect revenues that did not approach the numbers conveyed to potential investors; its total assets according to those documents were approximately $4 million, and it had no overseas operations whatsoever, let alone significant revenues from Mexico or a major presence “on the high seas.”

“The plan Goldstein outlined for investors, in explaining how MSI could afford to offer such high yields on the 22% Notes, focused on what Goldstein described as MSI’s expectation to purchase six or seven security companies to fuel increased revenues,” the agency continued.

“Contrary to this supposed plan, MSI not only failed to purchase any security companies with the money obtained from investors in the Notes; nearly all of the money raised from those investors was spent to fund Goldstein’s and Vassell’s salaries, fund the payments on the Notes themselves, and pay for various other of MSI’ s ongoing claimed expenses,” the agency alleged.

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2 Responses to “SEC: New York Pitchman, 73, Hawked ‘Illegal Offering’ For Murdoch Security & Investigations Inc. By Spinning Tall Tale Of ‘Anti-Piracy’ And ‘Anti-Terror’ Success On The ‘High Seas’”

  1. I was wondering if you had any follow up info on Vassel and his scam artist salesman? I am ashamed to say that I worked for this company at a huge hedge fund in greenwich. Isnt it bad enough we have to worry about the company I was paid to protect who were all spin off operators from enron but the company that hired me turned out to be the biggest scam of all. In the name of private investigation and security which should be a noble and pure profession this scumbag stole a million dollars and gets to walk away after filing for bankruptcy? Why arent they in jail? I was on my way to work during the implosion of this hedge fund amaranth and I was arrested for my weapon because I was in ny on my way back into greenwich- I went to jail- so this guy steals 1 million dollars after making up delusional stories to naive investors and gets to walk away? I consider my time working for amaranth an honor and something that helped launch my career however I had no idea the character of the guy who owned murdoch- infact my x supervisor was and is a spot on great guy- my feeling is that he was blindsided by what transpired as well

  2. You can most certainly get an update on the former principal of this entity. After he filed Chapter 7 Bankruptcy and put MSI out of business, he started “William Vassell Services, Inc.”

    To see how he has done with this new entity check out:

    On the very bottom of the page (item #1, the Voluntary Petition Chapter 11 filing) is a pdf document that you can pull up, which tells the whole story…