The Securities and Exchange Commission is suing eCareer Holdings Inc. and its executives for fraud. According to the regulator, the online staffing company bilked over 400 investors of $11 million when it miserpresented the company and sold shares that were unregistered. Also accused of fraud are three boiler room brokers who tried to conceal that they were barred from the industry.
According to the SEC’s microcap fraud case, investors were bilked in cold calls that were made through a boiler room run by Frederick Birks, Dean A. Esposito, and Joseph DeVito. The three of them and their sales agents were hired by eCareer CEO Joseph J. Azzata.
Investors were told their funds would go toward working capital to develop the company’s online job staffing business. Instead, approximately 30% of their money went toward outrageous fees to the agents and brokers.
The financial scam purportedly began in August 2010. Also, Azzata is accused of diverting $650,000 to cover his own expenses.
In corporate filings the payments were wrongly characterized as having been paid to third parties for advisory and consulting services. The filings and offering materials misrepresented that eCareer shares would only be sold to investors who were accredited. In truth, the stock was promoted and sold to people, including very elderly seniors, who did not fit the criteria for investors that are “accredited.”
Also, the three brokers were already barred from acting as a dealer or broker or taking part in any kind of penny stock offering. This means they were not allowed to make money from selling eCareer stock.
It was in 2008 that the SEC filed a civil action against the men in connection to the sale of stocks in Weida Communications Inc. and SCL Ventures. The regulator said that they sold about $3 million of SCL Ventures to about 68 investors in 2004. At the time they were not registered with the Commission or associated with a registered dealer or broker. They were paid commissions of up to 20% for the stock sales.
Also, beginning in 2008, Birks and Esposito purportedly manipulated the market price for the common stock of Weida Communications, which was the successor company to SCL Ventures. About 16 investors paid at least $9.2 million of shares that were practically worthless. At the time, the three men were registered representatives with GlobalVest Group. They also received undisclosed commissions of up to 20% for the sales. Trading in Weida securities was suspended in April 2005. Now, the three men are accused of getting around these restrictions by signing agreements with Azzata that categorized their payments as finder and advisory fees.
Contact Shepherd Smith Edwards and Kantas, LTD LLP. We can help you determine whether you have grounds for a securities fraud case.
SEC Halts Microcap Scheme in South Florida, SEC, April 16, 2015
SEC Charges Group of Florida Brokers Stock Manipulation and Other Violations in Connection With Sale of Stock in SCL Ventures And Weida Communications, SEC, February 13, 2008
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RBC Capital Markets Must Pay $1M Fine and $434K Restitution to Customers Over Unsuitable Reverse Convertible Sales, Stockbroker Fraud Blog, April 30, 2015
More than $600K Whistleblower Award to Be Issued in SEC’s First Retalitation Case, Institutional Investor Securities Blog, April 30, 2015
City of Los Angeles, CA Sues Wells Fargo for Fraud, Stockbroker Fraud Blog, May 5, 2015
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