The U.S. Securities and Exchange Commission (SEC) recently announced that it has charged four individuals in a fraud in which victims included seniors who were solicited at “free dinner” investment seminars in Florida.
In its report, the agency alleged that Joseph Andrew Paul and John D. Ellis Jr. lied about the track record of their investment advisory firm and recruited James S. Quay of Atlanta and Donald H. Ellison of Palm Bay, Fla., to lure potential victims with promises of lofty returns.
Also Paul and Ellis created fraudulent marketing materials, including some with performance numbers that were “cut and pasted” from another firm’s website. The complaint further alleged that Quay and Ellison used these materials to mislead seniors who responded to their mass-mailing offer of a free dinner at a Tampa restaurant.
According to the SEC, Quay used an alias, Stephen Jameson, to conceal his true identity from potential victims. Quay was convicted of tax fraud in 2005 and found liable for securities fraud in a 2012 SEC enforcement action.
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Sharon Binger, director of the SEC’s Philadelphia Regional Office, commented:
As we allege in our complaint, a large portion of the money was never invested but instead was split among these self-described investment experts whose only real expertise was stealing other people’s money.
One takeaway from this was that “Jameson” was not registered as an investment professional during the relevant period of fraudulent conduct, and Ellison also was not registered for the majority of that period. The SEC notes that investors can easily and quickly check the registration status and disciplinary history of investment professionals by using the searchable database on the SEC’s website.
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