January 23, 2018 / 11:40 PM / 10 months ago

U.S. charges two over fraud featuring bogus SEC employees

BOSTON, Jan 23 (Reuters) - Employees at a Florida fast-food restaurant participated in a scam that involved impersonating U.S. Securities and Exchange Commission employees to trick investors into paying them $1.3 million, federal prosecutors alleged on Tuesday.

Leonel Alexis Valerio Santana, 28, and Frank Gregory Cedeno, 27, were accused in a criminal complaint filed in Boston federal court with participating in a fraud aimed at getting investors to pay fees for a cut of a corporate settlement with the SEC.

Valerio, who authorities said ran the scheme from the Dominican Republic and now lives in Boston, and Cedeno, who had worked at an unnamed Orlando restaurant, were charged with conspiracy and wire fraud.

Valerio was arrested in New York and Cedeno was arrested in Massachusetts. Their lawyers did not respond to requests for comment.

According to the complaint, the scheme targeted purchasers of binary options and especially investors who bought them from entities being sued by U.S. regulators, including Cyprus-based Banc de Binary.

The SEC and the U.S. Commodity Futures Trading Commission sued Banc de Binary in 2013, claiming it illegally recruited U.S. investors to its trading platform. In 2016, it settled the SEC’s case for $11 million.

Beginning in 2015, former purchasers of Banc de Binary securities started to receive emails and telephone calls from people claiming to be SEC employees seeking money in connection with their investments, the complaint said.

Victims of the scam often received emails that used official-seeming documentation to support a false claim that investors had to pay fees to receive a portion of the SEC’s settlement with Banc de Binary, according to court papers.

The scam ran from June 2015 to June 2017 and sought payments of over $1.3 million from at least 95 victims, including people in Australia and the United Kingdom, the complaint said. It said at least 25 people sent the fraudsters more than $235,000.

Victims sent the money to participants in the scheme including Cedeno, who established an internet-based phone number used to communicate with the investors, the complaint said.

The scam’s participants then forwarded the funds to people in the Dominican Republic including Valerio, who in July while out for drinks told co-workers that he had run a fraud scheme, the complaint said.

Other co-conspirators in the fraud included Valerio’s sister and uncle and two employees at the fast-food restaurant that Cedeno worked at, the complaint said. (Reporting by Nate Raymond in Boston; Editing by Tom Brown)

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