FBI Arrests Former Washington Resident who Fraudulently Promoted IPO Stock Scheme
Allegedly Defrauded Investors of Millions of Dollars by Posing as a British Billionaire with Inside Track on New Companies
A 27-year-old man was arrested in Los Angeles today on a criminal complaint charging him with wire fraud, announced U.S. Attorney Annette L. Hayes. KEENAN A. GRACEY, formerly of Newcastle, Washington, defrauded Seattle-area investors and others out of millions of dollars by pretending to sell them stock that GRACEY did not own and had no right to sell. GRACEY will make his initial appearance in U.S. District Court in Los Angeles.
According to the criminal complaint, between 2016 and 2018, GRACEY posed as a British billionaire with degrees from the London School of Economics and Oxford University. He drove expensive cars such as Bentleys and Ferraris and claimed to own expensive homes in Clyde Hill, Mercer Island, and Newcastle, Washington, as well as in Beverly Hills and San Diego, California. GRACEY also used falsified bank statements to make it appear he had hundreds of millions of dollars of cash on hand. The investigation revealed that GRACEY is Canadian, not British, and rented expensive homes and cars to make it appear he was wealthy.
GRACEY told potential investors he had special access to millions of shares of “pre IPO” stock that would produce returns of as much as 60 times the initial investment. Some investors gave GRACEY as much as $745,000, believing that they were purchasing stock. In fact, GRACEY did not own any of the stock he was pretending to sell, and simply stole the victims’ money. According to the complaint, investigators have identified more than 25 investors who transferred over $3.4 million to Gracey through bank wires.
The Securities and Exchange Commission filed a civil suit against GRACEY in May 2018 and obtained a temporary restraining order barring him from selling securities. In September 2018, the order was made permanent and GRACEY was ordered to disgorge $4.4 million in cash and wire transfers that he had fraudulently obtained from investors.
The charges contained in the complaint are only allegations. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.
Wire fraud is punishable by up to 20 years in prison.
The case is being investigated by the FBI. The case is being prosecuted by Assistant United States Attorney Seth Wilkinson.