Net Widens in California $60 Million Securities Fraud Case
The U.S. Securities and Exchange Commission (SEC) has charged two more men in an ongoing $60 million securities fraud case in California.
The SEC already charged John Geringer, a Scotts Valley, Calif. –based investment advisor, in the case last May. Now the agency is hoping to prosecute his former partners, Christopher Luck and Keith Rode, according to a press release issued last month. The trio’s California investment firm defrauded some 90 investors of $60 million, the government claims.
The SEC said that Luck and Rode discovered Geringer was a fraud back in 2009. “Luck and Rode knew Geringer had squandered millions of dollars in investor funds and were uniquely positioned to stop the fraud in its tracks,” stated an SEC supervisor. “Rather than expose Geringer, they instead chose to join forces and pretend it was business as usual, further concealing the fraud from investors.”
In fact, instead of investing in securities, Geringer had used “the lion’s share” of investor funds to invest in two private technology startup companies. Despite this, Luck kept trying to sign up new investors for the fund, said the SEC. He issued fraudulent marketing materials that claimed the fund earned between 17 percent and 25 percent returns annually. Luck claimed Geringer relied on investments tied to major stock indices.
As for Rode, a certified public accountant, he mailed account statements to investors with highly inflated cash balances. This resulted in several investors sinking more cash into the fund, and rolling over their existing investments for additional one-year periods.
On Dec. 20, 2012 a federal grand jury in San Jose, Calif. indicted the trio on 38 criminal charges, according to the Press-Banner, a regional newspaper. The charges included mail fraud, wire fraud, and securities fraud, and conspiracy to commit mail and wire fraud. If convicted, says the FBI, the men could face a maximum of 90 years in prison and $6 million in various fines. Additionally, the SEC wants to recover the stolen money, plus interest and civil penalties.
Have you or a loved one been taken advantage of by a securities fraud scam? Then call Sokolove Law today for a free legal consultation about a securities fraud lawsuit.