Blotter August 2010
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Tweeting Fraud
The Securities and Exchange Commission charged Carol McKeown and Daniel F. Ryan, a Canadian couple residing in Montreal, with fraudulently touting penny stocks through their website, Facebook and Twitter. The SEC also charged two companies the couple control, Downshire Capital Inc., and Meadow Vista Financial Corp.
The SEC obtained an emergency court order to freeze the assets of McKeown and Ryan. Since at least April 2009, the couple allegedly sold millions of shares of Downshire and Meadow Vista on the open market while touting them on their website PennyStockChaser.com, predicting massive price increases, a practice known as “scalping.” The website invited investors to sign up for daily stock alerts through email, text messages, Facebook and Twitter.
The complaint alleges that McKeown, Ryan and one of their corporations failed to disclose the full amount of the compensation they received for touting stocks on PennyStockChaser. The SEC alleges that McKeown, Ryan and their corporations have realized at least $2.4 million in sales proceeds from their scalping scheme.
Caribbean Ponzi
The SEC charged and froze the assets of a purported fund manager based in the U.S. Virgin Islands who perpetrated a $105 million Ponzi scheme against 400 investors through a complex network of foreign bank and brokerage accounts.
According to the SEC complaint, filed in U.S. District Court for the Northern District of Illinois, from at least 2004 to present, Daniel Spitzer, a resident of St. Thomas, used several entities and sales agents to misrepresent to investors that their money would be invested in investment funds allocated primarily to foreign currency.
Spitzer allegedly invested approximately $30 million of the more than $105 million he raised from investors. These investments lost money and were subsequently liquidated. Investors were falsely told that Spitzer's funds had never lost money and historically produced profitable annual returns as high as over 180 percent. Spitzer instead used money raised from new investors to pay earlier investors, and misappropriated investor funds to pay unrelated business expenses. He concealed his scheme by issuing phony documents to investors that led them to believe their investments were profiting. The SEC further alleges that Spitzer led an extravagant lifestyle and spent more than $900,000 at a Las Vegas casino.
