Three Charged with Securities Fraud Conspiracy for Operating Brooklyn-based Boiler Room
A criminal complaint was unsealed today in federal court in Brooklyn charging Alan Labiner, Khurram Tanwir, and Ahmed Awan with conspiracy to commit securities, mail, and wire fraud for operating a boiler room in Brooklyn and embezzling their investors’ money.1 According to the complaint the defendants spent investors’ money on personal expenses, including strip clubs, tanning salons, pharmaceuticals, and car washes. Labiner and Awan were arrested earlier today and Awan’s initial appearance is scheduled this afternoon before United States Magistrate Judge James Orenstein at the United States Courthouse, 225 Cadman Plaza East, Brooklyn, New York.
The charges were announced by Benton J. Campbell, United States Attorney for the Eastern District of New York, and Ron Verrochio, Inspector-in-Charge, United States Postal Inspection Service, New York.
The complaint charges that from 2004 to 2009, the defendants took more than $6 million from at least 50 investors, including from Individual Retirement Account funds of senior citizens, by selling fraudulent securities in four different investment schemes:
Manhattan North Real Estate Investment Trust, Inc., a purported real estate investment trust that claimed to invest in real property in upper Manhattan;
Next Point USA, Inc., which purported to invest in credit cards with high interest rates;
Grant Boxing, Inc., which purported to sell boxing equipment and clothes; and
Exposure Management Group, which purported to manage and promote popular musicians, models, and actors.
In each scheme the defendants allegedly induced investors to send money by lying about the companies or the securities, and subsequently commingling and misappropriating the investors’ money. The complaint charges that Tanwir and Awan trained and then supervised cold-callers who contacted prospective investors. As part of the Exposure Management scheme, the cold-callers were instructed to tell potential investors that they had missed a profitable investment opportunity – based on a stock that had actually increased in value – when the cold-caller had last called them. In fact, there had been no previous call; the scheme relied on the expectation that potential investors would fail to realize that they had never received an earlier call and that the actual rise in the named stock’s price would make the pitch credible and appealing.
The defendants were all, at one point, registered representatives licensed by the National Association of Securities Dealers (now known as the Financial Industry Regulatory Authority, or “FINRA”). Each has since lost his license.
“Protecting the public from investment fraud schemes is a priority of this office,” stated United States Attorney Campbell. “Those who engage in such conduct can expect to be investigated and prosecuted to the full extent of the law.” Mr. Campbell acknowledged the assistance of the United States Securities & Exchange Commission, which had previously charged and obtained injunctive relief against the defendants, and the assistance of the Federal Bureau of Investigation.
“The defendants are charged with conspiring to defraud their victims to finance their own personal life styles,” stated Postal Inspector-in-Charge Verocchio. “The Postal Inspection Service is committed to protecting investors by using all available criminal, civil, and administrative legal tools to stop investment fraud.”
If convicted, the defendants face a maximum sentence of five years’ imprisonment.
The government’s case is being prosecuted by Assistant United States Attorneys Michael L. Yaeger and Evan Weitz.
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