Investment Firm President and Four Others Arrested for Securities Fraud
Investors Lose More Than $17.5 Million In Investment Advisory Fraud Scheme
Earlier today, Kenneth Marsh, the president and owner of Gryphon Holdings Inc., a purported financial advisory firm located in Staten Island, and four Gryphon employees, Baldwin Anderson, Robert Anthony Budion, Jeanne Lada, and James T. Levier, were arrested on charges of conspiracy to commit securities fraud and wire fraud.1 The defendants’ initial appearances are scheduled for this afternoon before United States Magistrate Judge Marilyn D. Go at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.
The charges and arrests were announced by Benton J. Campbell, United States Attorney for the Eastern District of New York, and Ronald J. Verrochio, Inspector-in-Charge, New York Division, United States Postal Inspection Service.
According to the complaint, since approximately January 2007, the defendants and others defrauded victims of more than $17.5 million for fees and investment advisory services. Gryphon victims, many of whom were elderly retirees, typically received unsolicited emails and telephone calls touting the firm’s services and directing them to its website. These communications and the website allegedly contained multiple misrepresentations concerning Gryphon’s employees, services, customers, history, and even the location of its office, including:
• Traders “Michael Warren” and “Kenneth Maseka,” graduates of Harvard, Oxford, Columbia, and Wharton and alumni of Lehman Brothers and Goldman Sachs, headed the firm, its billion dollar hedge funds, and its legendary trading desk. In fact, “Warren” and “Maseka” are fictional, and the firm has no hedge funds or trading desk.
• [Global financier and philanthropist] George Soros stated that, “Alone the traders of Gryphon Financial are incredible, together the[y] are unstoppable.” Mr. Soros did not make this statement.
• Gryphon operates from offices on Wall Street, London and Sydney. In fact, it is run from a strip-mall on Staten Island.
As alleged in the complaint, once the victims provided contact information, the defendants called and, employing additional misrepresentations and high pressure sales tactics, sold increasingly more expensive versions of Gryphon’s services. Despite Gryphon’s public representations that it was only a publisher of financial newsletters, during the sales calls the victims were fraudulently offered personalized advisory services, including investment recommendations, portfolio analysis, and money management.
“Fair capital markets depend on the protection of the small investor, and we will vigorously investigate and prosecute operators of fraudulent investment advisory schemes that seek to prey on their clients,” stated United States Attorney Campbell. Mr. Campbell expressed his grateful appreciation to the United States Secret Service and the Securities & Exchange Commission for their assistance in the investigation.
Postal Inspector-in-Charge Verrochio stated, “Postal Inspectors will pursue those who would prey on Americans by defrauding them of their hard earned income with phony investment schemes.”
If convicted, the defendants each face a maximum sentence of 20 years’ imprisonment.
The government’s case is being prosecuted by Assistant United States Attorney Roger Burlingame.
ROBERT ANTHONY BUDION
JAMES T. LEVIER
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