SEC Files Charges Over Securities Fraud Scams that Used YouTube, Facebook, Twitter, & Other Social Media

The US Securities and Exchange Commission has filed securities fraud charges against Joseph Signore, Paul L. Schumack II, and their respective companies for their Florida-based Ponzi scam that purportedly used YouTube videos to target hundreds of US investors to get them to invest in virtual concierge machines that were supposed to garner 300-500% returns in four years. The two companies are T.B.T.I. Inc. and JCS Enterprises Inc.

According to the SEC, the two men and their companies falsely promised investors that their money would go toward the purchase of these ATM-like machines, which businesses would then use to promote services and products via touch screen, coupons, or printable tickets. The machines were to be placed at airports, hotels, and stadiums.

Instead, contends the regulator, Schumack, Signore, and their companies used investors’ funds in Ponzi scam-fashion, taking new investors money to pay the “returns” of earlier investors and paying for their personal expenses (including credit card bills, restaurants, unrelated business ventures, and family spending).

The men and their companies raised about $40 million in their scam, which they also marketed via e-mail and during investor seminars. The Ponzi scheme failed when investor money ran out.

Meantime, the U.S. Attorney’s Office for the Southern District of Florida has filed a parallel action announcing criminal charges.

Prosecutors are calling the scam an alleged $70 million investment fraud. Investors who put in $3,500 were supposedly guaranteed $300/month over three years from advertising revenue sold on the machines.

Also this month, the SEC is suing a Honolulu woman for pretending to be an expert in hedge funds investments and pursuing investors via Facebook, Twitter, and other forms of social media. Keiko Kawamura allegedly ran two separate scams. She purportedly was able to collect about $700,000 money from subscribers and investors of her self-described hedge fund.

In one investment scheme, Kawamura allegedly published screenshots on Twitter of brokerage account statements showing amazing returns-only the account statements did not belong to her. In a second alleged securities scam, Kawamura bragged about her “professional experience,” and made claims that she made 800% returns in her personal account.

Kawamura is accused of using the money she collected to pay for expensive trips and support herself. She did invest some of the funds, which the SEC says she lost by investing the money in risky options trades.

Social Media and Securities Scam
Unfortunately, with investors turning more and more to the Internet and social media for information about investing and investments, this can make them easy and accessible targets for fraudsters. Online, scammers are able to reach lots of people at low cost while using simple technology to make themselves appear legitimate.

If you think you were the victim of an investment scam, contact our securities fraud lawyers today.

The SEC Order Against Kawamura (PDF)

Investor Alert: Social Media and Investing – Avoiding Fraud, Investor.gov

Read the SEC Order in the Ponzi Scam (PDF)

More Blog Posts:
$550M Securities Fraud Case Between Texas’ Wyly Brothers & SEC Goes to Trial, Stockbroker Fraud Blog, April 2, 2014

PNC Bank Sues Morgan Stanley & Ex-Trust Adviser For “Surreptitious Conspiracy”, Institutional Investor Securities Blog, April 3, 2014

SEC Says Investment Advisors Can Publish Third-Party Endorsements Online, Stockbroker Fraud Blog, April 1, 2014