Gryphon Holdings Inc.'s owner and four employees of the Staten Island, New York-based investment firm were charged with conspiracy to commit securities fraud and wire fraud in an alleged $17.5 million scheme.
Gryphon Holdings Inc.’s owner and four employees of the Staten Island, New York-based investment firm were charged with conspiracy to commit securities fraud and wire fraud in an alleged $17.5 million scheme.
Kenneth Marsh, 43, Gryphon’s president, and the employees, who are accused of falsely claiming endorsements from financier George Soros, are scheduled to appear in court today, Brooklyn U.S. Attorney Benton Campbell said in an e-mailed statement.
Investors, usually elderly retirees, received unsolicited e-mails and phone calls touting Gryphon’s services, according to the statement. Once the victims provided contact information, Gryphon’s employees used high-pressure tactics and misrepresentations to sell more expensive versions of their services, Campbell said.
“Fair capital markets depend on the protection of the small investor,” he said. “We will vigorously investigate and prosecute operators of fraudulent advisory schemes.”
The U.S. Securities and Exchange Commission also sued the firm, Marsh and four of his associates, accusing them of misleading investors into paying fees for phony stock tips and investment advice. The SEC obtained an emergency court order freezing assets of the firm and the individuals involved, the agency said in a statement today.
Gryphon officials didn’t immediately return voice-mail messages seeking comment.
Gryphon’s employees lied about their credentials, falsely claiming to oversee billion-dollar hedge funds from offices on Wall Street and in London and Sydney, Campbell said. The shop was run from a Staten Island strip mall, he said.
Gryphon charged clients as little as $99 and as much as $250,000 for access to its investment recommendations, according to the SEC complaint filed today in federal court in Brooklyn. The company received $9.6 million last year and $3 million in the first two months of this year from investors, according to the complaint.
“When clients complained to Gryphon about losses or other unsatisfactory aspects of Gryphon’s service, defendants often unilaterally terminated any further contact,” the SEC said. Clients often lost money on trades suggested by Gryphon, the agency said.
Gryphon marketing and sales representatives Baldwin Anderson, 55, and Robert Anthony Budion, 28, both of Staten Island, and James T. Levier, 34, of Beachwood, New Jersey, face civil and criminal fraud charges, along with Jeanne M. Lada, 44, of Freehold, New Jersey, marketing and content creator for Gryphon’s Web site.
The company as recently as April 16 promised returns of 483 percent in less than two months and said clients had the chance to turn $5,000 into hundreds of thousands of dollars in months, according to the SEC.
“The profits will keep rolling in,” Gryphon promised.
The SEC case is Securities and Exchange Commission v. Gryphon Holdings Inc., 10-cv-01742, U.S. District Court, Eastern District of New York (Brooklyn).
