New York City Man Sentenced to Federal Prison for Stock Trading Scheme
DENVER – Michael Todd Osborn, age 46, of New York, was sentenced by U.S. District Court Judge Christine M. Arguello on last week to serve 77 months in prison followed by 3 years of supervised release for wire fraud and money laundering, announced Acting U.S. Attorney Robert C. Troyer and IRS Criminal Investigation Special Agent in Charge Steven Osborne. He was taken into custody at the end of the sentencing hearing.
Osborn and his co-defendant Corey Earl Engelen were indicted by a federal grand jury in Denver on February 11, 2015. Osborn pled guilty on February 9, 2016 and was sentenced on December 1, 2016. Osborn was ordered to pay a fine of $100,000 and restitution of $695,000 to the investors of this his fraudulent scheme.
According to the indictment and plea agreement, beginning in October 2009 and continuing until July 2010, Osborn devised a scheme to defraud investors. He told them that he would use their funds to trade stocks on their behalf. In fact, he did no trading, and he and his Colorado associate used the investors’ money for their own personal benefit and purposes other than trading. Osborn held himself out to investors as an experienced trader of stocks and other securities and a veteran in the equity/swing trading business. He sold investors units in the CU Equity Swing Fund I, LLC and the 10x Leveraged Oscillator Fund, through which he represented he would conduct short-term trading. Investors typically learned of the investment opportunity through a friend or trusted associate.
Osborn falsely represented that he had a prime trading account through which he would be able to leverage the funds invested and thereby reap greater profits than from unleveraged trading and falsely represented that the investors’ funds were protected from fraud, larceny, and embezzlement by a fidelity bond with Lloyds of London.
Osborn instructed investors to wire their funds to accounts held in the name of Infinite One, LLC, which he represented to be the trading accounts he would use for the trades. In fact, the accounts were not trading accounts and were never used for trading. They were merely checking accounts held by Osborn’s associate in Colorado. Once the investors had wired funds, Osborn provided them “blotters,” which contained detailed records of trades he had purportedly made.
The information provided to the investors was false, as Osborn had never made the trades, and certainly no profits had been realized. Instead, Osborn used the funds for his own personal benefit, including purchasing a Mercedes-Benz, paying for family vacations, paying his attorney and a victim in an unrelated criminal case, and paying his ordinary living expenses and debts.
“These are the worst kind of thieves. They carefully and deliberately go to great lengths to lie and steal the savings of innocent people,” said Acting U.S. Attorney Bob Troyer. “IRS Criminal Investigators are excellent at tracking down thieves like this. It is their work, with our Assistant U.S. Attorney, that sends these folks where they belong.”
“This sentencing demonstrates the excellent partnership between IRS-CI and the U.S. Attorney’s Office in working together to stop the criminal behavior of those who prey on investors for their own personal financial gain,” said Steven Osborne, Special Agent in Charge, IRS-Criminal Investigation, Denver Field Office. “IRS Criminal Investigators will continue to use their financial expertise to identify and trace laundered funds in these types of investor fraud schemes.”
Engelen pled guilty on October 13, 2016 to one count of money laundering and is scheduled to be sentenced by Judge Arguello on January 31, 2017.
This case was investigated by Internal Revenue Service – Criminal Investigation with assistance from the Special Enforcement Program of the Internal Revenue Service. This case was prosecuted by Assistant U.S. Attorneys Linda Kaufman and Bishop Grewell.