The Texas State Securities Board issued a statement finding several individuals guilty in their roles in a multimillion dollar investment scheme.
In total, there were three main individuals involved in the scheme that were convicted in prior trials. Most recently, Richard Gregory Tilford was convicted of several fraud and securities charges for his role in the fraudulent scheme. This week, the court convicted Tilford to 40 years in prison for his unlawful actions.
Tilford founded StaMedia, Inc. along with several co-defendants who were also convicted in prior trials. StaMedia claimed to be a digital marketing company with valuable digital media patents and other proprietary assets.
Tilford, along with his co-founders Bobby Guess and Timothy Lloyd Booth, pitched the company to a number of investors from from 2013 to 2016. In total, the company raised over $23 million from investors, with some investors handing over as much as $500K to the company.
Court records and news reports indicate that the money was improperly used throughout the life of the fraudulent scheme. Tilford and his co-founders reportedly used the money for exotic cars, extravagant vacations, luxury homes, and other personal expenditures. Although investors were promised a 9% return on their money, most investors never saw a dime.
The founders targeted many elderly individuals to invest in the company. Tilford and his constituents claimed that the company had a digital media patent that was valued at $85 million. Along with the 9% “guaranteed” return, these factors likely swayed investors to jump at the investment opportunity.
This situation problematic for a number of reasons. Three major concerns that existed in this particular scheme are included below:
- Unregistered brokers. There was no indication that any of the individuals involved with StaMedia were registered investment professionals or brokers. Most investment professionals are required to register with FINRA and/or the SEC. Additionally, individuals registered with these institutions are required to abide by a number of regulatory rules and regulations. However, no one at StaMedia was permitted by these regulatory bodies to sell securities.
- Unrealistic promises. Fraudsters often make unrealistic statements and promises relating to their schemes. If a company has a patent that is worth $85 million, a number of questions should be raised: why the value is so high, how does the patent lead to investment returns, whether there is proof of a patent, and other similar concerns.
- Conflicting financial statements. Reports show that StaMedia had zero revenue while it managed to raise over $23 million. While it is unclear whether financial statements were even provided to investors, a legitimate statement would have raised a number of concerns. Fraudsters often protect against this risk by providing financial statements that look legitimate. However, if there were no financial statements whatsoever, concerns should have been raised immediately. This is the importance of undergoing proper due diligence before making major investments.
We list these concerns above so that you are equipped with some techniques on how to spot potential fraud in the marketplace. These are some of the most common issues we have seen in a number of fraud cases.
If you suspect your investment is tied up in a fraudulent investment scheme, please contact us for a confidential, no-cost consultation. Call us at 239-319-4434 to speak to one of our experienced securities attorneys today.