SEC Charges Internet Marketers with Swindling Main Street Investors Through Phony Infomercials
Litigation Release No. 24631 / September 30, 2019
Securities and Exchange Commission v. Sechovicz, No. 19-cv-12027 (D. Mass. filed September 27, 2019) and Securities and Exchange Commission v. Szatmari, No. 19-cv-12028 (D. Mass. filed September 27, 2019)
The Securities and Exchange Commission charged internet marketing business partners Peter Szatmari and David Sechovicz with allegedly creating and disseminating elaborate rags-to-riches videos to trick vulnerable retirees and other Main Street investors into opening brokerage accounts and trading securities known as binary options.
According to the SEC's complaints, filed in federal district court in Boston, defendants created and disseminated fraudulent marketing materials, such as deceptive websites, advertisements styled as news articles, and fraudulent emails. The complaints allege that defendants, acting as "affiliate marketers," also exposed millions of prospective investors in the United States to professional looking, but false, videos. The videos, which depicted purported investors enjoying lavish lifestyles from trading binary options and showed "live" demonstrations of investors opening and funding binary option trading accounts and watching their trading balances increase automatically, were, according to the complaint, pure fiction.
The SEC's complaints charge defendants with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and the registration provisions of Section 5 of the Securities Act. The complaints seek injunctive relief, disgorgement of ill-gotten gains, prejudgment interest, and civil penalties.
Sechovicz has consented, without admitting or denying the allegations in the complaint, to the entry of a final judgment that imposes permanent injunctions from violations of the charged provisions and orders him to pay $1,899,837 in disgorgement, $83,571 in pre-judgment interest, and a civil penalty of $949,918. The settlement is subject to court approval.
The SEC's investigation was 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 Commodity Futures Trading Commission.
Investors can learn more about the dangers of binary options schemes by watching this short video. The SEC's Office of Investor Education and Advocacy has issued investor guidance cautioning investors to be aware of fraudulent promotion schemes involving binary options and binary options trading platforms, as well as guidance for senior citizens on how they can protect themselves from fraud.