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SEC Closes Book on Boiler Room Operation
[Photo: Vin Diesel, Boiler Room - The Movie from New Line Cinema]
The SEC issued Administrative Proceedings against several people who acted as unregistered brokers in a Florida-based boiler room while offering and selling shares of Oxford City Footclub, Inc.
Between September 2013 and May 2014, individuals used leads lists and sales scripts provided by CEO Thomas Guerriero to solicit investors to purchase shares of Oxford City - purported to be private offerings, but which were actually unregistered public offerings. Among the false statements made were that:
- Oxford City was a 131 year-old, debt-free holding company;
- Oxford City had a book value of $38 per share and should be trading at 5-6 times book value;
- Oxford City stock value would dramatically increase within the first year;
- Oxford City would pay a 50% dividend within the first year;
- Oxford City stock would be listed on the NYSE in 2015;
- Oxford City owned or operated a broadcast network that included a radio station;
- Oxford City owned $90 million worth of real estate;
- Oxford City owned an online university with an enrollment of 10,000 students; and,
- Guerriero had a personal net worth in excess of $100 million.
In some instances, investors were falsely told that they were legally bound to purchase Oxford City stock because a government compliant “voice verification system” had recorded their assent to the sale, and that the transaction was filed with the federal government and linked to the investor’s name, social security number, and date of birth.
SANCTIONED/INCARCERATED PLAYERS. Named in various Administrative Proceedings were, the following:
- Edward Sachs, 57, was given a 16-month prison term, followed by 2 years of supervised release, and ordered to pay $810K in restitution.
- Steven Goldstein, 61, was given a 40-month prison term, followed by 3 years of supervised release, and ordered to pay $68K in restitution.
- Joseph Loish, 64, was given a 10-month federal prison sentence, followed by 3 years of supervised release, and ordered to pay $50K in restitution.
- Steven Sharaf, 64, given 3-year probation, which includes 6 months in a Home Detention Electronic Monitoring Program, and ordered to pay $15K in restitution.
- Frank Penaloza, 30, was given a 105-day prison sentence with credit for time served, followed by 3 years of supervised release, and ordered to pay $75K in restitution.
- Victor Lovera, 29, was given 5-year probation, and ordered to pay $9K in restitution.