The United States Securities and Exchange Commission (SEC) announced on Monday that it has settled with two more defendants of a $10 billion scam.
The two defendants, Emin Cohen and Dennis Verderosa, were among the 13 perpetrators involved in scamming people, mostly elderly, by pressurizing them in buying penny stocks. The SEC first officially in a New York court in July 2017.
Both Cohen and Verderosa were ordered to pay $136,373 and $383,344 respectively, plus prejudgment interest, and the entire amount will be recovered from the forfeiture and restitution ordered in a parallel criminal case against them.
Additionally, the judge barred the two from dealing with penny stocks, with an additional bar for Cohen from the securities industry.
Furthermore, Cohen and Verderosa pleaded guilty in the criminal proceedings against them and are now facing jail time of 24 and 72 months respectively, followed by 3 years’ supervised release.
Last June, the SEC settled with three other perpetrators involved in the same boiler room scam and fined them $2,212,946, $2,446,137, and $251,615 respectively, along with prejudgment interest. For the criminal complaints, all of them are facing 120 months behind bars.
Investors Need to Be Cautious
Boiler room scams are among the oldest investment scamming tactics as perpetrators engage in cold calling potential victims and persuade them to buy junk stocks.
As detailed in the initial court documents, the perpetrators were running their operations from New York. The SEC charged all 13 of the involved perpetrators with fraud and brought additional charges of market manipulation against 9 of them.
The lawsuit further mentioned 27 individuals and entities that received proceeds from the operation.
Meanwhile, other regulators are also vigilant against such scams. Earlier this year, Belgium’s financial market regulator against 3 companies allegedly running such boiler room scams and targeting the country’s citizens.