Impersonating SEC officials rarely, if ever, ends well for those who try it. As I wrote here back in May 2009, con artists seem to give this failed scam a try every few years, in various different forms. In May 2009, the SEC warned that fraudsters were deceiving investors by using the names of actual SEC employees in an attempt to get potential victims to reveal private information, grant access to their brokerage accounts, and even send money and other assets to impostors. In other instances, the SEC said, individuals attempted to impersonate SEC examiners to gather confidential information from broker-dealers and investment advisers through bogus “emergency” examinations.
As discussed in my earlier post, there have been other flavors of "impersonation" cases in recent years. None of them are as dramatic, however, as the one that was in the news this week when a fourth person, Michael David Sanders, pleaded guilty for his role in a desperate scheme that involved impersonating officials from the SEC and the FBI in an effort to recover money that was lost to an alleged $40 million Ponzi ring. The Sacramento Bee reports that the driving force behind the impersonation scheme was another, earlier fraud: a Ponzi scheme allegedly carried out by Anthony Vassallo, who was indicted in April 2009 for mail fraud, wire fraud and money laundering. Vassallo has pleaded not guilty.
Prosecutors charged that a month before Vassallo was indicted, four men walked into the Folsom, California office of Vassallo's Equity Investment Management and Trading Inc. wearing everything from bulletproof vests to handcuffs to badges, earpieces and even a stun gun. They announced that they worked for the and the SEC, and demanded, unsuccessfully, that the people at Equity Investment Management and Trading wire $378,300.16 to an account at an area credit union. Notably, the four men were vigilantes of sorts--prosecutors acknowledge that they "appeared to be genuinely working on behalf of people who had lost money investing with Equity Investment Management and Trading."
Three other men involved in the phony raid have already pleaded guilty to impersonating an officer or to the misdemeanor of illegally possessing false documents. Their sentencings are scheduled for next month.
- Thought Leadership