Investing
SEC Issues Fraud Charges for Misleading Investors Through a Dating Site
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The U.S. Securities and Exchange Commission (SEC) recently announced fraud charges and an asset freeze against a Connecticut man accused of misleading people into investing in his company, then taking their money for his personal use. The victims include several women he met through an online dating website.
The agency alleged that Thomas J. Connerton told investors that his company, Safety Technologies, was developing a material to make surgical gloves better resistant to cuts or punctures. He also claimed that several major glove manufacturers wanted the technology and Safety Technologies was on the brink of imminent deals that would result in large payouts for investors in his company.
However, no deals have ever been anywhere close to materializing, and Connerton emptied the company’s bank account by writing a series of checks to himself and using investor funds for his own expenses.
According to court documents filed by the SEC, among Connerton’s improper spending of investor funds was $20,000 for an engagement ring for his latest online date turned investor. There are over 50 investors in Safety Technologies, including six women Connerton met through online dating and 14 others who are family or friends of those women.
Paul G. Levenson, director of the SEC’s Boston Regional Office, commented:
We charge Connerton with lying about the state of his business and exploiting personal connections to lure in investors. Investors beware: a rosy picture of a business that’s about to take off could still lead to a total loss of investment.
According to the report, Connerton failed to comply with the requirements for private offerings exempt from registration under the federal securities laws, such as providing investors with appropriate financial information and confirming that they have sufficient knowledge and experience to evaluate the merits and risks of the investment.
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