Date: 2007-04-19
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Kevin J. O’Connor, United States Attorney for the District of Connecticut, announced that JOHN R. BLOT, also known as Victor Morgan, age 28, of Brooklyn, New York, was sentenced today by United States District Judge Janet C. Hall in Bridgeport, to 36 months of imprisonment, followed by three years of supervised release, for participating in a “boiler room” investment scheme that victimized approximately 275 victims of more than $3.6 million.
(Media-Newswire.com) - Kevin J. O’Connor, United States Attorney for the District of Connecticut, announced that JOHN R. BLOT, also known as Victor Morgan, age 28, of Brooklyn, New York, was sentenced today by United States District Judge Janet C. Hall in Bridgeport, to 36 months of imprisonment, followed by three years of supervised release, for participating in a “boiler room” investment scheme that victimized approximately 275 victims of more than $3.6 million. Judge Hall also ordered BLOT, jointly and severally with others involved in the scheme, to pay restitution of approximately $1.8 million. On October 27, 2006, BLOT pleaded guilty to one count of securities fraud.
According to documents filed with the Court and statements made in court, from 2001 to 2004, BLOT and several co-conspirators falsely represented to their victims, including citizens of Connecticut, through “cold calls” that they worked for Blue Square Management (“Blue Square”), a venture capital firm that was in the business of selling securities and specializing in underwriting initial public offerings. In reality, Blue Square was a fraudulent entity with no legitimate operations. BLOT and the other participants in the conspiracy made unsolicited cold calls and told the potential investors that they could purchase securities in a company called Cash Money Lending Corporation (“CMLC”), another fictitious company that the participants in the conspiracy represented to be an actual company purportedly in the business of managing ATM machines.
The telephone solicitations were separated between (a) “Cold-Callers,” who contacted potential investors to get them interested in investing with Blue Square and then “qualify” them and “open” them as “clients,” and (b) “Traders,” who contacted the individuals who had been “qualified” as “clients,” and made additional false and fraudulent representations to them in order to obtain funds from them by selling bogus CMLC stock. BLOT was a “Cold-Caller” in this scheme.
The conspiracy participants falsely represented that CMLC operated a lucrative business managing thousands of ATMs across the country and that an initial public offering for CMLC, and/or a buyout of the company, would occur in the near future. They told investors that the purchase of stock before the initial public offering or buyout would result in a significant profit, and that in addition to purchasing stock, investors could receive warrants that would also be of significant value. Investors could purchase CMLC stock for $7 to $10 per share, which was represented to be one-third to one-half of the planned initial public offering or buyout price.
Following the verbal solicitation of investments made during the cold calls, in an attempt to lure and entice investors, the participants in the conspiracy distributed and caused to be distributed false and misleading promotional materials about the fictitious CMLC to prospective investors. To further create the appearance of legitimacy, the participants in the conspiracy sent to the prospective investors documents that contained false and misleading representations, including stock certificates, subscription agreements for the purchase of common stock of CMLC, and invoices. The false documentation also set forth the number of shares the investor had agreed to purchase, the payments owed, and the estimated opening price. Upon receiving “investment” checks from the victims, the participants in the conspiracy failed to invest the money as represented, but instead diverted investors’ funds for their own personal use and benefit, including paying business expenses, and converting large amounts of the funds into cash.
This case was investigated by the Federal Bureau of Investigation, the Social Security Administration Office of Inspector General, Office of Investigations, and the U.S. Postal Inspection Service, with the assistance of the Securities and Exchange Commission. U.S. Immigration and Customs Enforcement has also assisted in this matter. The case is being prosecuted by Assistant United States Attorneys Michael S. McGarry and Calvin B. Kurimai.