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Six Floridians Indicted on Fraud Charges in $21 Million Investment Scam

The Securities and Exchange Commission (SEC) recently indicted six individuals with several fraud charges each in connection with an alleged investment scam related to mobile gaming and online shopping.

Details

According to an SEC statement on the matter, the six individuals involved in the alleged investment scam raised nearly $21 million for the development of a mobile gaming application.

The problem? The app never generated any sales or profits, nor did it even launch any version of the app for the marketplace.

Social Voucher

SEC documents claim that the six individuals involved in the scheme raised funds from investors through an entity called Social Voucher, Inc., also known as Stocket, Inc. These individuals claimed that Social Voucher would develop an app that would compete with a company like Groupon, the famous e-commerce app that provides savings for its users across a wide range of consumer products, services, experiences, and more.

Instead of using investor money from Social Voucher, the individuals used the money for personal expenditures. Gerald Parker, CEO of Social Voucher, reportedly used the money to pay commissions to the other five individuals serving as salespeople for the company. The SEC also alleges that Parker used nearly $2 million of investor money to pay off gambling debts at casinos.

Red Flags

As securities attorneys, we often see a number of red flags in investment fraud cases.

Many red flags can be spotted by completing proper due diligence. Often times, we see a number of scam artists use their sales expertise and charm to attract unsuspecting investors. In this case, Parker allegedly hired a number of individuals as telemarketers to attract individuals to invest in the company. This is a common tactic that we have seen firsthand in a number of cases.

Additionally, while completing due diligence, it is crucial to look at financial documents. While many scam artists can fabricate financial documents, some fail to even produce any documents whatsoever. If this is the case, it should serve as a major red flag. This case does not mention whether any financial documents were produced, but it does mention that the company failed to produce any sales or profit as a result of obtaining $21 million of investor money.

It is also important for investors to look into the individual(s) pitching a particular investment. In this case, the SEC alleges that the individuals charged in this case sold millions of dollars in stock to investors. In many cases, shares of stock must be registered with the SEC. If a seller is not registered with the SEC, it should serve as another major red flag.

Thus, before deciding to invest in a particular product, service, or idea, it is crucial to complete independent, unbiased due diligence to protect yourself from potential investment fraud. Scam artists often target unsuspecting individuals, especially elderly clients with money.

Contact the securities attorneys at Vernon Litigation Group at 239-319-4434 for a confidential, no-cost consultation today.

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