On July 27, 2015, the Department of Justice (“DOJ”) revealed that eight individuals were indicted in a National Football League (“NFL”)-related securities fraud scheme that victimized elderly investors. According to the DOJ, the eight individuals allegedly raised over $2.7 million by persuading investors to acquire stocks in two companies, Thought Development Inc. (“TDI”) and Virgin Gaming, by misrepresenting or omitting crucial information about these investments to their clients. As a result, the defendants were charged with conspiracy to commit mail and wire fraud.
According to the DOJ release, the first company, TDI, claimed that it had developed a device which could produce clear, visible green laser lines on football fields. The purpose of the technology was to shorten the time that it takes for officials to determine first downs in order to maximize advertising time during broadcasts of games. Investors were told that an initial public offering in TDI was expected in the near future and that their money would be invested into the technology. However, the IPO was not imminent, and at least half of the money was kept by the defendants or transferred to sales agents through hidden fees and commissions.
Similarly, securities for Virgin Gaming were also allegedly sold by the defendants through unscrupulous means and used to pay undisclosed fees and commissions. The defendants persuaded investors to purchase stocks of a company that produced a service for online tournaments, fantasy sports leagues and competitive gaming. Sales agents misled their investors into purchasing these stocks in one of two ways. Agents lied to investors by informing them that they were buying Virgin Gaming stock when, in reality, they were not. To others, sales agents misrepresented that investors would acquire the right to purchase Virgin Gaming stock through their investments and that investors’ shares would be converted into Virgin Gaming shares prior to an initial public offering. However, this was a blatant lie, as there was never an option to buy Virgin Gaming stocks in the first place.
U.S. Attorney Wifredo A. Ferrer for the Southern District of Florida stated, “Securities fraud schemes that target members of our community jeopardize our personal investments and security. Our Office, in collaboration with the FBI, strives to prevent the victimization of our elderly residents. By combatting these invasive fraud schemes, we help to protect potential victims from losing their hard-earned money to telemarketing thieves.”
The attorneys at Lax & Neville LLP have extensive experience in successfully prosecuting and defending claims on behalf of customers who have suffered losses. If you are a victim of fraud, please contact Lax & Neville LLP today at (212) 696-1999 to schedule a consultation.