A California man admitted his involvement in a large-scale and long-running Internet-based fraud scam that allowed him and other fraudsters to drain about $50 million from hundreds of investors.
Between 2012 and October 2020
Allen Giltman, 56, and his co-conspirators constructed phoney websites to collect money from people via the internet by advertising various investment opportunities (mainly the purchase of certificates of deposit).
According to court documents, "The Fraudulent Websites advertised higher than average rates of return on the CDs, which enhanced the attractiveness of the investment opportunities to potential victims. At times, the fraudulent websites were designed to closely resemble websites being operated by actual, well-known, and publicly reputable financial institutions; at other times, the fraudulent websites were designed to resemble legitimate-seeming financial institutions that did not exist."
They advertised the phoney investment sites in Google and Microsoft Bing search results for phrases like "best CD rates" and "highest cd rates."
The scammers pretended to be FINRA broker-dealers in interactions with victims seeking investment possibilities, claiming to be employed by the financial companies they imitated on the scam sites.
They employed virtual private networks (VPNs), prepaid gift cards to register web domains, prepaid phones, and encrypted applications to interact with their targets, and false invoices to explain the huge wire transfers they obtained from their victims to mask their genuine identities during their fraud schemes.
"To date, law enforcement has identified at least 150 fraudulent websites created as part of the scheme," the Justice Department stated.
"At least 70 victims of the fraud scheme nationwide, including in New Jersey, collectively transmitted approximately $50 million that they believed to be investments."
The charge of wire fraud conspiracy, which Giltman consented, carries a possible sentence of 20 years in jail, while the charge of securities fraud carries a maximum sentence of five years in prison.
Both are punishable by fines of $250,000 or double the gross gain or loss from the offence, whichever is greater. Giltman is scheduled to be sentenced on May 10, 2022.
Stay Vigilant
The FBI's Criminal Investigative Division and the Securities and Exchange Commission cautioned investors in July 2021 that scammers posing as registered financial professionals such as brokers and investment advisers were posing as them.
The July alert came after FINRA issued a similar fraud alert the same week regarding broker imposter frauds involving phishing sites that impersonate brokers and faked SEC or FINRA registration documents.
"Fraudsters may falsely claim to be registered with the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA) or a state securities regulator in order to lure investors into scams, or even impersonate real investment professionals who actually are registered with these organizations," the FBI and SEC stated.
Investors should first use the Investor.gov search engine to see if people marketing investment possibilities are licensed or registered, and then ensure they're not scammers by contacting the seller using independently confirmed contact information from the firm's Client Relationship Summary (Form CRS).
