PatrickPretty.com

Tag: Palm Beach Gardens

  • ANOTHER FLORIDA FRAUD CONVICTION: Michael J. Muzio Ran ‘Pump-And-Dump’ Scheme In Case Tied To Ponzi And Affinity-Fraud Scheme Targeting Haitian-Americans

    A Florida man implicated in a pump-and-dump scheme tied to a Ponzi- and affinity-fraud scheme has been convicted and faces decades in federal prison.

    Michael J. Muzio, 46, of Tampa, was convicted on six counts of securities fraud, two counts of substantive wire fraud, two counts of lying to the SEC and the FBI and one count of conspiring to commit wire fraud.

    Muzio’s pump-and-dump scheme is linked to the alleged Home Pals Investment Club Ponzi and affinity-fraud scheme involving Ronnie Eugene Bass Jr., Abner Alabre and Brian J. Taglieri.

    Bass, Alabre and Taglieri were accused civilly and criminally of targeting Haitian-Americans in a $14.3 million scheme.

    Alabre, 33, of Miramar, Fla., and Taglieri, 39, of Jupiter, Fla., already have pleaded guilty to criminal charges, which were brought in October 2009. Bass and Alabre were accused by the SEC of fooling investors by saying Taglieri was Home Pals’ attorney, but Taglieri is not an attorney, according to records.

    Muzio defrauded Haitian-American and other investors in South Florida and elsewhere “by manipulating” the stock price of International Business Ventures Group (IBVG), a Florida shell company “with no assets and virtually no business activities,” prosecutors said.

    IBVG purportedly was operated from Palm Beach Gardens. Last month, U.S. Attorney General Eric Holder described the Palm Beach area as the “ground zero” of financial fraud. Holder ventured to Palm Beach to make a speech and introduce the Obama administration’s Financial Fraud Enforcement Task Force.

    The manipulation scheme was carried out through “coordinated stock purchases and sales designed to artificially impact share prices,” the FBI said.

    “To induce investors to purchase the stock, [Muzio] created a false impression that an active market for the stock existed by engaging in illegal ‘wash trades’ in which he simultaneously entered buy orders through one brokerage account under his control and offsetting sell orders at the same price through another brokerage account under his control.

    “These trades had no real economic effect, but the defendant’s brokers unwittingly reported the trading activity and potential investors who saw the online reports were misled into believing that the stock was actively traded at the quoted prices,” the FBI said.

    As often is the case in pump-and-dump schemes, Muzio “issued false and misleading press releases” claiming that the company had profitable business dealings.

    Muzio claimed IBVG “had deals to provide and offer prepaid debit cards in Haiti,” as well as prepaid calling cards and “exclusive rights to market prepaid electric meters in Haiti,” the FBI said.

    “Investors were offered the chance to purchase free-trading shares of stock, but then received certificates for restricted shares which could not be traded and ultimately proved to be worthless,” the FBI said.

    Home Pals advised website viewers that the company was “honest” and adhered to “uncompromising ethics,” the SEC said.

  • BULLETIN: Another Florida Fraud Case; SEC Charges 4 In Alleged ‘Children’s Book’ Scheme Known As ‘Winning Kids’; Attorney General Introduced Task Force In Area Three Weeks Ago

    UPDATED 5:18 P.M. ET (U.S.A.) A Florida company and four individuals have been charged with securities fraud by the SEC, amid allegations they fleeced investors in a children’s book company known as “Winning Kids.”

    Charged in the case were Winning Kids Inc. of Palm Beach Gardens, Fla; Christian Hainsworth, Winning Kids’ chief executive officer and founder; and sales agents Robert Comiskey, Edward Tamimi and Victor Selenow. The SEC alleged the defendants sold unregistered securities to as many as 190 investors, raising $1.9 million in the scheme.

    The litigation is centered in Palm Beach County, an area U.S. Attorney General Eric Holder visited three weeks ago to discuss the Obama administration’s Interagency Financial Fraud Enforcement Task Force.

    Hainsworth was accused of receiving $541,000 over the course of the unregistered offering, “through checks he issued to himself and his wife and ATM withdrawals,” the SEC said.

    Meanwhile, Comiskey, Tamimi, and Selenow received about “$322,000 of the offering proceeds as selling commissions,” the SEC said.

    Hainsworth, Tamimi and Selenow had previous run-ins with regulators, the SEC said.

    “In 1995, the Kansas Securities Commission entered a consent order against Hainsworth to cease offering to sell unregistered securities in that state,” the SEC said.

    Hainsworth was also a subject of the South Dakota cease-and-desist order earlier this year, stemming from the business practices of Winning Kids, according to records.

    Tamimi, 33, of Palm Beach Gardens, was filed $5,000 by the National Futures Association (NFA) in 2006 “for making misleading sales solicitations and using high-pressure sales tactics,” the SEC said.

    He received $194,250 in sales commissions from Winning Kids between May 2007 and September 2008, the SEC said.

    Selenow, 48, of Royal Palm Beach, was charged with securities violations by the SEC in 2002 and ordered to disgorge $30,000. The 2002 case involved a company known as “The Gaming Factory Inc.,” according to records.

    In 1995, according to records, the NFA fined Selenow $50,000 “for making misleading sales solicitations and using high-pressure sales tactics,” the SEC said.

    Selenow received $41,500 in Winning Kids’ commissions between April and December of 2007, the SEC said.

    Comiskey, 62,of Palm Beach Gardens, received $86,975 in Winning Kids’ sales commissions between April 2007 and September 2008, the SEC said.

    Holder spoke in South Florida Jan. 8, saying the area was altogether too familiar with financial fraud and using an event at the Forum Club of the Palm Beaches to spotlight the Interagency Financial Fraud Enforcement Task Force.

    Only three weeks after Holder left, the SEC filed the Winning Kids’ action. The litigation once again puts Palm Beach County in an unwanted spotlight. It is the home of each of the Winning Kids’ defendants and the same county in which Holder spoke, describing the area as “Ground Zero” of financial fraud.

    Each of the defendants was familiar with securities laws and held various securities licenses over the years, the SEC said.

    “Winning Kids marketed its securities offerings primarily through a radio advertisement Hainsworth placed on a station covering New York, New Jersey, and Connecticut,” the SEC said. “The ad provided a toll-free number for interested investors to call. Hainsworth hired Comiskey, Tamimi, Selenow, and other sales agents to speak with potential investors.”

    Prospects were told “that Winning Kids was a “dividend yielding investment” to be paid out on a quarterly basis,” the SEC said.

    Lies were part of the scheme, the SEC alleged.

    “The sales agents told investors they were vice presidents of Winning Kids, and Hainsworth provided them with business cards stating that,” the SEC said.

    In reality, however, the SEC said, “they were independent contractors that received commissions based on the sale of Winning Kids securities.”

    Sales agents were paid “cash commissions of 15 to 20 percent of each sale they made,” the SEC said. “In addition, Selenow received for a few months 5 percent of the sales proceeds the other sales agents raised.”

    Hainsworth, the SEC said, “paid the entire 20 percent at the time the sales agent made each sale.”

    Hype also was part of the scheme, the SEC charged.

    Winning Kids’ pitch included claims the company “was starting an acceleration phase of extraordinary growth,” the SEC said. “In reality, Winning Kids generated almost no revenue from the sale of its books or any other product from 2004 through 2008. In addition, Winning Kids spent most of 2007 redesigning the books rather than trying to actively sell them.

    “Furthermore,” the SEC said, “Winning Kids did not actively try to sell its books for most of 2008.”

    Winning Kids suggested in offering materials that “for each $10,000 [customers] invested, they could expect to get back $30,000 a year — in other words, a 300 percent annual return,” the SEC said.

    Winning Kids based is assertions on unrealistic projections, while also misleading investors on how the company would use their money, the SEC said.

    Although Private Placement Memoranda “represented that 90 percent of the offering
    proceeds would be used for product development, manufacturing, advertising, marketing, and working capital,” the SEC said, “Hainsworth and the sales agents received at least 40 percent of the $1.9 million Winning Kids raised.”

    Winning Kids and Hainsworth have consented to the entry of a final judgment that permanently enjoins them from committing or aiding and abetting future violations of the above provisions, and orders them to pay disgorgement of ill-gotten gains and a civil penalty.

    Winning Kids and Hainsworth neither admitted nor denied the SEC allegations, in consenting to the judgment.