Politicians may not always be taken at face value, but a recent incident gives new meaning to that expression.
According to authorities, a former gubernatorial candidate and state Republican Party chairman is accused of cheating 120 investors out of about $13 million in a securities fraud scam. The man may have capitalized on the connections and media attention he received in his former political life in attracting unsuspecting investors.
In this case, however, the man is accused of using a second fraudulent scheme to pay off the wronged investors from an earlier fraud. Given that fact, the judge did not go light on his sentencing. In addition to paying a fine of about $8.4 million, the fraudster will serve a six-year prison sentence.
The man entered the technology business world after his stint in politics. He claims that that 2008 financial crisis forced him to turn to fraudulent activity. Capitalizing on his dot.com background, the man lured investors by promising them shares in companies on the eve of their initial public offerings.
But the man never owned shares in those companies, nor did he use the money to purchase the stocks. Instead, he spent the money on personal needs, including about $6 million for paying off creditors in his bankruptcy proceeding.
Unfortunately, unless a legitimate company worked in concert with the fraudster, and therefore could be a defendant that defrauded investors could sue, the prospect of recovering money for the wronged investors can be highly unlikely. Proactive consultation with a lawyer might help investors avoid such missteps.
Source: Herald Tribune, “Florida man gets 6 years in Facebook securities fraud case,” Larry Neumeister, Dec. 17, 2013