Online Marketers Charged with Conning Main Street Investors Through Rags-To-Riches Infomercials
Litigation Release No. 24333 / November 2, 2018
Securities and Exchange Commission v. Justin Blake Barrett and Grayson Brookshire, No. 3-18-cv-00522 (WDNC filed September 27, 2018)
On September 27, 2018, the Securities and Exchange Commission charged a group of internet marketers who allegedly created and disseminated elaborate rags-to-riches videos to trick retirees and other retail investors into opening brokerage accounts and trading high-risk securities known as binary options.
According to the SEC's complaints, investors were conned out of tens of millions of dollars through these marketing campaigns, which promised that investors would make large amounts of money by opening binary options accounts and using free or secret software systems to trade in them. The SEC alleges that the marketers were paid for each new brokerage account that investors opened and funded. According to the complaints, the marketers' internet video advertisements, which were disseminated through spam emails, used actors to portray ordinary people who became millionaires by trading binary options. The videos staged fake demonstrations of supposed software users watching their account balances grow in real time. The SEC alleges that the software was simply a ruse to persuade investors to open accounts with the brokers.
The SEC's complaints charged 10 individuals and two companies involved in the fraudulent marketing campaigns. The SEC alleged that Timothy Atkinson, All In Publishing, LLC, Ronald Montano, Antonio Giacca, Travis Stephenson, Grayson Brookshire, and Justin Blake Barrett violated Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder and Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 ("Securities Act"). The SEC also alleged that Jay Passerino violated Section 10(b) of the Exchange Act and Rule 10b-5(a) and (c) thereunder and Sections 5(a), 5(c) and 17(a) of the Securities Act. The SEC further alleged that all of these defendants aided and abetted each other's violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and Section 17(a) of the Securities Act. In addition, the SEC alleged that Atkinson and Montano each violated Section 10(b) of the Exchange Act and Rule 10b-5(b) thereunder through or by the means of the other defendants, in violation of Section 20(b) of the Exchange Act, and that Atkinson is liable under Section 20(a) of the Exchange Act as a control person for the violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder by All In Publishing, LLC. Finally, the SEC alleged that William Berry, Berry Mediaworks,LLC, Shmuel Pollen, and Michael Wright aided and abetted violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and Section 17(a) of the Securities Act by Atkinson, Passerino, All In Publishing, LLC, Giacca, Montano and Stephenson.
The SEC's complaints seek penalties, disgorgement of ill-gotten gains, and permanent injunctions against Timothy J. Atkinson, Ronald "Ronnie" Montano, Jay Passerino, Michael Wright, and All In Publishing LLC. Justin Blake Barrett, William E. Berry and his company Berry Mediaworks, Grayson Brookshire, Antonio Giacca, Shmuel Pollen, and Travis Stephenson have agreed to settle the SEC's charges. Without admitting or denying the charges, they agreed to pay a combined total of $4.1 million in disgorgement and prejudgment interest. Pollen has agreed to pay a $42,500 penalty. The Commission did not assess a penalty on the other settling parties as a result of their cooperation during the investigation and ongoing cooperation.
The SEC's investigation, which is continuing, is being conducted by Jason Anthony, Michael Fuchs, and Deborah Maisel, and supervised by Jennifer Leete. The SEC's litigation against Atkinson, Passerino, Montano, Wright, and All In Publishing will be led by Kenneth Donnelly. The SEC appreciates the assistance of the Commodity Futures Trading Commission.