The
Securities and Exchange Commission (SEC) has filed charges against three Nigerian
nationals in connection with an elaborate digital fraud scheme that allegedly
bilked investors out of more than $2.9 million through the impersonation of
legitimate U.S. financial professionals.
SEC Charges Three in $2.9
Million Financial Advisor Impersonation Scheme
The SEC’s enforcement
action targets Chibuzo Augustine Onyeachonam, Stanley Chidubem Asiegbu, and
Chukwuebuka Martin Nweke-Eze for orchestrating a sophisticated online deception
that spanned multiple years and victimized at least 28 investors.
According
to the SEC’s complaint filed in New Jersey federal court, the defendants
created an intricate web of deception by establishing websites that mimicked
those of approximately two dozen genuine securities brokers and investment
adviser representatives from prominent U.S. financial firms.
“Today’s
charges highlight how fraudsters can manipulate online information and use
technology to gain trust with investors,” said Sanjay Wadhwa, Acting Director
of the SEC’s Division of Enforcement. “We caution the investing public to be on
heightened alert when investing with someone who is soliciting investments
through social media, even if that person appears to be a financial industry
professional.”
Also this week,
the SEC reported on a $15 million settlement
with Morgan Stanley Smith Barney (MSSB) over supervisory failures. The
regulator alleged that these lapses allowed financial advisors to conduct
unauthorized transfers, leading to the theft of millions from client accounts.
How the Scheme Worked
The
scheme’s sophistication was evident in its multi-layered approach. The
defendants allegedly planted fake testimonials across social media platforms
and investment discussion groups, creating an illusion of legitimacy and
success. They promised investors monthly returns of up to 25% and developed
fictitious online investment platforms that displayed artificial portfolio
growth to maintain the deception.
In a
particularly cunning twist, the defendants employed voice-modifying software
during investor communications, primarily because many of the professionals
they impersonated were women. This technical sophistication helped maintain the
facade while extracting millions from unsuspecting victims.
The SEC’s
complaint charges the defendants with violations of anti-fraud provisions under
multiple securities laws, including the Securities Act of 1933 and the Exchange
Act of 1934. Two defendants face additional charges under the Investment
Advisers Act of 1940.
The
Commission is seeking permanent injunctions, disgorgement of ill-gotten gains
with interest, and civil monetary penalties. Parallel criminal proceedings have
been initiated by the U.S. Attorney’s Office for the District of New Jersey.
Meanwhile,
Finance Magnates highlighted two other notable fraud cases targeting investors.
In one case, the Commodity Futures Trading Commission (CFTC) charged a
Washington state pastor with orchestrating a $5.9 million cryptocurrency
scheme. The pastor allegedly exploited his position of trust to defraud over
1,500 Spanish-speaking congregants, promising guaranteed returns through an
automated trading platform.
In another
case, a federal court ordered five individuals linked to Icomtech to pay over
$5 million in penalties for running a digital asset fraud scheme. Operating
between August 2018 and December 2019, the scheme targeted nearly 200 investors
worldwide, falsely promising daily returns of up to 2.8% through Bitcoin and
other cryptocurrencies.
The
Securities and Exchange Commission (SEC) has filed charges against three Nigerian
nationals in connection with an elaborate digital fraud scheme that allegedly
bilked investors out of more than $2.9 million through the impersonation of
legitimate U.S. financial professionals.
SEC Charges Three in $2.9
Million Financial Advisor Impersonation Scheme
The SEC’s enforcement
action targets Chibuzo Augustine Onyeachonam, Stanley Chidubem Asiegbu, and
Chukwuebuka Martin Nweke-Eze for orchestrating a sophisticated online deception
that spanned multiple years and victimized at least 28 investors.
According
to the SEC’s complaint filed in New Jersey federal court, the defendants
created an intricate web of deception by establishing websites that mimicked
those of approximately two dozen genuine securities brokers and investment
adviser representatives from prominent U.S. financial firms.
“Today’s
charges highlight how fraudsters can manipulate online information and use
technology to gain trust with investors,” said Sanjay Wadhwa, Acting Director
of the SEC’s Division of Enforcement. “We caution the investing public to be on
heightened alert when investing with someone who is soliciting investments
through social media, even if that person appears to be a financial industry
professional.”
Also this week,
the SEC reported on a $15 million settlement
with Morgan Stanley Smith Barney (MSSB) over supervisory failures. The
regulator alleged that these lapses allowed financial advisors to conduct
unauthorized transfers, leading to the theft of millions from client accounts.
How the Scheme Worked
The
scheme’s sophistication was evident in its multi-layered approach. The
defendants allegedly planted fake testimonials across social media platforms
and investment discussion groups, creating an illusion of legitimacy and
success. They promised investors monthly returns of up to 25% and developed
fictitious online investment platforms that displayed artificial portfolio
growth to maintain the deception.
In a
particularly cunning twist, the defendants employed voice-modifying software
during investor communications, primarily because many of the professionals
they impersonated were women. This technical sophistication helped maintain the
facade while extracting millions from unsuspecting victims.
The SEC’s
complaint charges the defendants with violations of anti-fraud provisions under
multiple securities laws, including the Securities Act of 1933 and the Exchange
Act of 1934. Two defendants face additional charges under the Investment
Advisers Act of 1940.
The
Commission is seeking permanent injunctions, disgorgement of ill-gotten gains
with interest, and civil monetary penalties. Parallel criminal proceedings have
been initiated by the U.S. Attorney’s Office for the District of New Jersey.
Meanwhile,
Finance Magnates highlighted two other notable fraud cases targeting investors.
In one case, the Commodity Futures Trading Commission (CFTC) charged a
Washington state pastor with orchestrating a $5.9 million cryptocurrency
scheme. The pastor allegedly exploited his position of trust to defraud over
1,500 Spanish-speaking congregants, promising guaranteed returns through an
automated trading platform.
In another
case, a federal court ordered five individuals linked to Icomtech to pay over
$5 million in penalties for running a digital asset fraud scheme. Operating
between August 2018 and December 2019, the scheme targeted nearly 200 investors
worldwide, falsely promising daily returns of up to 2.8% through Bitcoin and
other cryptocurrencies.
This post is originally published on FINANCEMAGNATES.
