$8 million stock fraud in California
16 April 2012 California
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A charge of defrauding $8 million from directors in an elaborate stock-lending scheme has been leveled at Argyll Investments by the SEC.
The SEC alleges that James Miceli and Douglas McClain, two senior executives at the California-based firm, have been acquiring publicly traded stock from corporate officers and directors at a discounted price from market value, separately selling the shares for full market value in order to fund the loan, and using the remaining proceeds from the sale of the collateral for their own personal benefit.
The entirety of Argyll Investments LLC has also been called into question, with the SEC contending that its claim to be a stock-collateralized loan business is merely a fraud. Miceli, McClain, and Argyll typically lied to borrowers by explicitly telling them that their collateral would not be sold unless a default occurred. However, since Argyll had no independent source of funds other than the borrowers’ collateral, Argyll often sold the collateral prior to closing the loan and then used the proceeds to fund it.
“Miceli and McClain thought they had devised a foolproof way to make substantial risk-free profits, but their purported business model was nothing more than an illegal get-rich-quick scheme,” said Scott W. Friestad, associate director of the SEC’s division of enforcement.
Also charged in the SEC’s complaint is the broker Jeffrey Spanier, through which Argyll attracted potential borrowers. The SEC contends Spanier, who owns AmeriFund Capital Finance LLC, violated the federal securities laws by brokering numerous transactions for Argyll while not registered with the SEC.
The SEC alleges that James Miceli and Douglas McClain, two senior executives at the California-based firm, have been acquiring publicly traded stock from corporate officers and directors at a discounted price from market value, separately selling the shares for full market value in order to fund the loan, and using the remaining proceeds from the sale of the collateral for their own personal benefit.
The entirety of Argyll Investments LLC has also been called into question, with the SEC contending that its claim to be a stock-collateralized loan business is merely a fraud. Miceli, McClain, and Argyll typically lied to borrowers by explicitly telling them that their collateral would not be sold unless a default occurred. However, since Argyll had no independent source of funds other than the borrowers’ collateral, Argyll often sold the collateral prior to closing the loan and then used the proceeds to fund it.
“Miceli and McClain thought they had devised a foolproof way to make substantial risk-free profits, but their purported business model was nothing more than an illegal get-rich-quick scheme,” said Scott W. Friestad, associate director of the SEC’s division of enforcement.
Also charged in the SEC’s complaint is the broker Jeffrey Spanier, through which Argyll attracted potential borrowers. The SEC contends Spanier, who owns AmeriFund Capital Finance LLC, violated the federal securities laws by brokering numerous transactions for Argyll while not registered with the SEC.
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