Gryphon Financial C.E.O. and Owner Sentenced to 8 Years of Imprisonment for Securities Fraud
Defendant Defrauded More Than 5,000 People in $20 Million Scheme 17 Co-defendants Receive Sentences of Incarceration
Kenneth Marsh, the co-owner and C.E.O. of Gryphon Financial (“Gryphon”), an investment advisory services company based in Staten Island, was sentenced today to 8 years of imprisonment for securities fraud. Senior United States District Judge Jack B. Weinstein imposed the sentence pursuant to Marsh’s April 14, 2011, guilty plea. Marsh’s 17 co-defendants received terms of imprisonment ranging from 3 to 25 months.
The sentences were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, Brian G. Parr, Special Agent-in-Charge, United States Secret Service, New York Field Office, and Ronald J. Verrochio, Inspector-in-Charge, New York Division, United States Postal Inspection Service.
According to their plea allocutions and documents filed in the case, Marsh and the 17 co-defendants he hired and trained, operating from a strip mall in Staten Island, sold Gryphon’s customers purportedly expert investment advice from two fictitious financial advisers – “Michael Warren” and “Ken Maseka.” Through telephone sales calls and a sophisticated website, Marsh and his co-defendants told the victims that “Warren” and “Maseka” were self-made billionaires who founded Gryphon after stellar careers at Goldman Sachs and Lehman Brothers, possessed sterling academic credentials, and consistently produced astonishing returns for their customers, among other lies. In fact, “Warren” and “Maseka” were aliases used by Marsh, a former stock broker who had been barred from the securities industry by the Financial Industry Regulatory Authority.
Marsh trained Gryphon sales representatives to use high-pressure sales tactics and a wide range of fraudulent misrepresentations to convince victims to pay to receive financial advice from the fictitious Warren and Maseka. Instead of providing sound investment advice, Marsh and his co-defendants pressured the victims to invest heavily in extraordinarily volatile securities. When those investments quickly lost value, Marsh and his co-defendants capitalized on the victims’ desperation to extract higher sums for new, special trade recommendations from “Warren” and “Maseka.” The defendants repeated the process until the victims’ assets were depleted or they stopped taking the defendants’ calls. Through these methods, Marsh and his co-defendants defrauded more than 5,000 people of approximately $20 million in fees, in addition to the incalculable trading losses suffered by the victims. Many victims were elderly; some lost their life savings.
Ms. Lynch expressed her appreciation to the United States Postal Inspection Service, the United States Secret Service and the United States Securities and Exchange Commission for their commitment and unwavering efforts in the investigation and prosecution of the case.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The Task Force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
The government’s case was prosecuted by Assistant United States Attorneys Roger Burlingame, Patrick Sinclair and Michael Yaeger.
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