SEC Settles Binary Options Fraud Charges Against Internet Marketers and Business Partner
Litigation Release No. 24701 / December 30, 2019
Securities and Exchange Commission v. Timothy J. Atkinson, et al., No. 18-cv-23993-RNS (S.D. Fla. filed Sept. 27, 2018) and Securities and Exchange Commission v. Montano, et al., No. 18-cv-01606-GAP-GJK (M.D. Fla. filed Sept. 27, 2018)
The Securities and Exchange today announced final judgments in two related actions involving a scheme to fraudulently induce investors to invest in binary options.
On June 5, 2019, the U.S. District Court for the Southern District of Florida entered final judgments by consent against Timothy J. Atkinson, his former business partner, Jay Passerino, and their former business, All in Publishing, LLC, to resolve pending claims that they fraudulently solicited retail investors to open and fund brokerage accounts to trade high-risk securities known as binary options. The SEC's complaint against Atkinson, Passerino, and All in Publishing alleged that while acting as "affiliate marketers," they created and disseminated professional-looking videos that fraudulently depicted "investors" enjoying rich lifestyles from trading binary options, and "live" demonstrations of investors opening and funding binary option trading accounts and watching their trading balances increase automatically. In reality, the defendants' videos were pure fiction.
On August 15, 2019, the District Court for the Middle District of Florida entered a final judgment by consent against Michael Wright to resolve pending claims that he aided and abetted the fraud. The SEC's complaint charged Wright with creating fraudulent internet marketing materials, including deceptive emails, scripts, slides, and/or videos, that were then disseminated to prospective investors by defendant Ronald C. Montano.
The final judgment entered against Atkinson and All in Publishing, to which they consented without admitting or denying the allegations in the complaint, orders them to pay disgorgement of $27,208,987 in ill-gotten gains and $2,824,935 in pre-judgment interest, and orders Atkinson to pay a civil penalty of $27,208,987. The final judgment entered against Passerino, to which he also consented without admitting or denying the allegations in the complaint, orders him to pay disgorgement of $1,894,991 in ill-gotten gains, $220,431 in prejudgment interest, and a civil penalty of $1,894,991. The final judgments provide that the disgorgement ordered against each defendant is to be offset by any disgorgement ordered against that defendant in the related case of Commodity Futures Trading Commission v. Timothy Joseph Atkinson, et al., Case No. 1:18-cv-23992-JEM. As to Atkinson and Passerino, the final judgments entered also order that the civil penalty amount ordered against each would be reduced by any penalty amount ultimately paid by that defendant in the CFTC action.
The judgments also enjoin Atkinson, Passerino, and All In Publishing from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933; from violating the securities registration provisions of Section 5 of the Securities Act; and from marketing, offering or selling securities over the Internet or through other electronic means to persons other than themselves and members of their immediate families.
The final judgment against Michael Wright, to which he consented without admitting or denying the allegations in the complaint, orders him to pay disgorgement of $266,353 in ill-gotten gains, which includes prejudgment interest, and a penalty of $266,353. The judgment also enjoins Wright from violating the antifraud provisions of Section 10(b) of the Exchange Act, Rule 10b-5 thereunder, and Section 17(a) of the Securities Act, and from marketing, offering or selling securities over the internet or through other electronic means to persons other than himself and members of his family.
The SEC previously obtained final judgments by consent against William E. Berry, Berry Mediaworks, LLC, and Shmuel Pollen, Justin Blake Barrett and Grayson Brookshire. The SEC also previously obtained final judgments by consent against Giacca and Stephenson. The SEC's case against Ronald Montano is on-going.
Both SEC investigations were conducted by Jason Anthony, Michael Fuchs, and Deborah Maisel, and supervised by Jennifer Leete. The SEC's litigation is being led by Kenneth Donnelly and Samantha Williams. The SEC appreciates the assistance of the CFTC, which filed actions against Atkinson, Passerino, All In Publishing, and Wright.