U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20967 / March 23, 2009
Securities and Exchange Commission v. Anthony Vassallo, Kenneth Kenitzer, and Equity Investment Management and Trading, Inc., Case No. 2:09-CV-00665-LKK-DAD (E.D. Cal. filed March 11, 2009), Case No. 2:09-CV-00665-LKK-DAD (E.D. Cal. filed March 11, 2009)
Criminal Charges Filed Against Two Individuals Related to $40 Million Ponzi Scheme
The Department of Justice announced on March 20, 2009 that it filed criminal charges against Anthony Vassallo, 29, of Folsom, California in the United States District Court for the Eastern District of California. The Department of Justice charged Vassallo with conspiracy, mail fraud, wire fraud, money laundering, and securities law violations for his role in an investment fraud. According to the criminal complaint, Vassallo took in $40 million from 150 investors to operate a hedge fund investment program as a massive Ponzi scheme. Vassallo is alleged to have deceived investors about their rates of return, fabricated performance reports, and used investor funds for unauthorized purposes, including to make purported "dividend" payments to other investors.
The Securities and Exchange Commission earlier filed a civil injunctive action against Vassallo, Kenneth Kenitzer, 66, of Pleasanton, California, and their company Equity Investment Management and Trading, Inc. (EIMT). In its complaint, filed in federal court in Sacramento on March 11, 2009, the SEC alleged that Vassallo, Kenitzer, and EIMT violated the anti-fraud provisions of the federal securities laws by orchestrating the multi-million dollar investment fraud. The SEC obtained emergency orders freezing Vassallo's and EIMT's assets, including $1.2 million in a bank account controlled by Vassallo. In its continuing case, the SEC seeks permanent injunctive relief, disgorgement of defendants' ill-gotten gains, and financial penalties.
See Litigation Release No. 20943 (March 11, 2009).
The Department of Justice also announced that on March 18, 2009, it filed charges against another individual, Michael David Sanders, a.k.a. David Dennis Sanders, 41, of Fair Oaks, California. Sanders was charged with conspiracy, impersonating a federal law enforcement agent, and attempting to extort monies in connection with recovering funds for EIMT. According to the criminal complaint, Sanders and others with him falsely posed as agents of the SEC, FBI, and Attorney General while displaying guns and threatening individuals with arrests if they did not wire funds to a specified bank account.
In other recent instances, individuals have attempted to obtain confidential information from investors, broker-dealers, and investment advisers by falsely identifying themselves as SEC employees. The SEC warns investors about con-artists who may impersonate SEC officials or use the names of actual SEC employees to mislead potential victims. If someone unfamiliar to you claims to be from the SEC, verify their identity by asking for their name, the SEC office in which they work, and their telephone number. Then call the SEC's personnel locator at 202-551-6000 and ask to speak directly to that SEC staff member. If you cannot verify the person's identity, please report it to the SEC by calling 800-732-0330 or e-mailing: help@sec.gov.
See also SEC Press Release 2009-39 (March 2, 2009).