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Regulatory Sanctions

Cybercrimes and Identity Theft: Talking About Auction Fraud …

March 18, 2019

by Howard Haykin


The President and Chief Compliance Officer (“PCCO”) of Park Sutton Advisors, a New York City-based broker-dealer, engaged in a pattern of bidding for and winning items at auction and then not paying for and collecting the items. By 2009, several auction houses prohibited the individual from participating in their auctions.
By November 2011, the PCCO yearned to return once again to the auction scene, but to do so he needed a plan to circumvent the auction houses' bans. So he decided to impersonate 10 current and former Park Sutton employees.



WHAT WENT WRONG.    From November 2011 through June 2015, the PCCO used the employees' personal information from the Firm's personnel files to create some 20 false online bidding accounts at 3 three auction houses. Without the consent of the employees, the PCCO created the false accounts by inputting their names into the auction houses' online account-opening systems, as well as fictional email addresses, physical addresses, and dates of birth.


Over that 3-1/2 year period, the PCCO participated in auctions during Firm business hours, at Park Sutton's office, using the Firm's computer equipment. On 26 occasions, he used the false accounts to win bids at the auction houses for items totaling over $500,000 in value. Only once did the PCCO pay for and collect the items he won.


On that one occasion, the PCCO forged a then-current employee’s signature on the auction house’s documents, forged that employee’s initials on a form authorizing the auction house to collect tax on the items, and forged the employee’s name on the credit card authorization form. Interestingly, the authorization contained his own credit card number.


Additionally, in or around March 2012, when one of the auction houses requested proof of address for one of the false accounts, the PCCO submitted a falsified telephone bill, inserting the name of the employee and the address on record for the fictitious account.



FINANCIALISH  TAKE AWAYS.    In August 2016, the Cybercrime and Identify Theft Squad for the District Attorney of New York (DANY) arrested and charged the PCCO with: (i) identity theft; (ii) falsifying business records; and, (iii) forgery. The PCCO pled NOT GUILTY to each charge.


In May 2017, the PCCO was permitted to resign from Park Sutton, and in January 2019, he agreed to be barred from the industry to settle FINRA charges that he violated FINRA Rule 2010.



This case was reported in FINRA Disciplinary Actions for March 2019.

For further details, go to ...  FINRA Disciplinary Actions Online, and refer to Case #2017054419802.