Five Individuals Convicted in $23 Million Boiler Room Fraud Scheme
Yesterday, a federal jury in Miami convicted Charles K. Topping, 40, of North Bay Village, Anita Sgarro, 54, of Marina Del Ray, Charles David Smigrod, 69, of Coconut Grove, Matthew William Wheeler, 33, of Miami, and James Wayne Long, 60, of Miramar, for their roles in two telephone sales room (“boiler room”) fraud schemes that targeted investors throughout the nation and defrauded over 700 victims out of $23 million. The fraud schemes operated out of Miami Lakes, Florida, and Marina Del Ray, California. Eight other co-conspirators who were involved in the fraud schemes previously pled guilty and are awaiting sentencing.
Benjamin Greenberg, Acting United States Attorney for the Southern District of Florida, and George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, made the announcement.
Following a two-month trial before U.S. District Judge Marcia G. Cooke, a jury convicted Topping, Sgarro, Smigrod, Wheeler, and Long of multiple counts of mail and wire fraud and conspiracy to commit mail and wire fraud in a conspiracy that operated from as early as 2009 until about August 2015.
According to the court record, from April 2009 to August 2015, Topping, Sgarro, Smigrod and Wheeler, along with their co-conspirators Craig Sizer, Keith Houlihan, Miguel (“Mike”) Mesa, Jack Willard Sini, Juan M. Perez Ortega, Martin Miller, Jason David Hershberger, and Shawna Leigh Lynch used false and fraudulent claims to solicit investors throughout the United States to buy shares of stock in Sanomedics International Holdings, Inc. (“Sanomedics”), a company that sold non-contact infrared thermometers for home healthcare and for dogs.
The evidence at trial showed that the sales agents used sales pitches that included several materially false statements, including that: stock sales did not include commissions or fees; sales agents were compensated with stock or paid by the hour; the stock could be sold after six months; the sales agents worked directly for Sanomedics; stock purchases were safe and secure; and famous and wealthy individuals, such as former CEOs of Apple Inc., PepsiCo, and IVAX Corp., and the “Dog Whisperer,” were either heavily invested in the company or were company representatives. In truth, the co-conspirator sales agents worked for Mesa and Sgarro in two boiler rooms, not for Sanomedics. Investors were never able to sell their stock. Approximately 90% of investor proceeds were misappropriated by the co-conspirators to cover commissions and fees. The co-conspirator sales agents were not paid by the hour and did not receive stock options, but were in fact paid hefty commissions. Additionally, there were no actual endorsements by celebrities or wealthy individuals. The investors relied on the fraudulent statements. As a result of the scheme, the co-conspirators defrauded over 700 people out of approximately $21 million.
Also, from approximately August 2014 to August 2105, Topping, Smigrod, Wheeler and Long, along with Sizer, Mesa, Sini, Perez, and Miller used a fraud scheme, similar to the one described above, to sell shares of stock in Fun Cool Free (“FCF”), a company that claimed to own a smartphone gaming portfolio with over 500 gaming applications. Mesa oversaw the boiler room that was utilized to facilitate the fraudulent scheme. The co-conspirators used false claims, including assertions that they worked directly for the company and that FCF was partners with Apple Computers, to defraud over 70 other investors out of $1.5 million.
Mr. Greenberg commends the investigative efforts of the FBI in this matter. This case is being prosecuted by Assistant U.S. Attorney Roger Cruz, and Trial Attorneys Ryan D. Tansey and Kevin B. Hart from the Antitrust Division of the U.S. Department of Justice.