U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23510 / April 4, 2016
Securities and Exchange Commission v. Joseph Andrew Paul, et al., Civil Action No. 16-1326 (E.D. Pa.)
SEC Charges Four in Fraudulent "Free Dinner" Scheme
The Securities and Exchange Commission today announced charges in a $3.9 million fraudulent money management scheme whose victims included seniors who were solicited at "free dinner" investment seminars.
The SEC alleges that Philadelphians Joseph Andrew Paul and John D. Ellis, Jr. lied about the investment track record of their investment advisory firm and recruited James S. Quay of Atlanta and Donald H. Ellison of Palm Bay, Fla. to find potential victims with promises of lofty returns.
According to the SEC's complaint, Paul and Ellis created fraudulent marketing materials including some with performance numbers that were "cut and pasted" from another firm's website. The complaint further alleges that Quay and Ellison used these materials to mislead seniors who responded to their mass-mailing offer of a free dinner at a Tampa restaurant.
According to the SEC's complaint filed in the U.S District Court for the Eastern District of Pennsylvania, Quay used an alias, "Stephen Jameson," to conceal his true identity from potential victims. Quay was previously convicted of tax fraud in 2005 and found liable for securities fraud in a 2012 SEC enforcement action.
"Jameson" was not registered as an investment professional during the relevant period of fraudulent conduct, and Ellison also was not registered for the majority of that period. Investors can easily and quickly check the registration status and disciplinary history of investment professionals by using the searchable database on the SEC's Investor.gov website.
The SEC's investigation was conducted by Lisa M. Candera and Brendan P. McGlynn. The SEC's litigation will be led by David L. Axelrod and Mark R. Sylvester, and the case is being supervised by G. Jeffrey Boujoukos. The examination that led to the investigation was conducted by Michael K. Nally, William M. Lavin, and John Cajulis under the supervision of Steven R. Dittert.