In our last post, we suggested some preventative measures that Florida investors might take before committing to various projects. The need for investor caution is apparent from the string of recent securities fraud stories in the news. Today's post adds to that list.
The U.S. Securities and Exchange Commission recently announced it had brought a securities fraud lawsuit against E-Monee.com, a now-defunct Florida company. The lawsuit culminates the efforts of an undercover sting begun in 2011, in which a federal agent posed as a wealthy Palm Beach investor.
The company allegedly misrepresented to investors that it owned around $5 billion in Mexican government bonds and was pursuing other projects, including the construction of an amusement park in Columbia. The company president is also alleged to have shown the undercover agent false documents, attempting to convince the agent of the validity of the company's ownership in the Mexican bonds.
Unfortunately, the company did not own $5 billion in bonds. It had little assets, and the bonds it did own were essentially worthless. The SEC's lawsuit also alleges that the company made additional misrepresentations to prospective investors to lure them in, such as overstating the projected value of E-Monee shares and that a reputable U.S. lawmaker was also an investor in the company.
Sometimes a simple background check might reveal discrepancies. For more complex investigations, a securities fraud attorney will be able to ensure that company representatives are not misrepresenting any material information about their business or selling unregistered securities not covered by an exemption to the SEC's registration requirements.
Source: sun-sentinel.com, "Feds: South Florida firm lied about having $5 billion in Mexican bonds," Jon Burstein, March 19, 2013