Peter C. Harvey, Attorney General
 
Bureau of Securities
Franklin L. Widmann, Chief
 
For Immediate Release:
April 15, 2005
For Further Information Contact:
Peter Aseltine (609) 292-4791

 

Attorney General Harvey Shuts Down
Fraudulent Internet Securities Boiler Room
Fictitious Trenton Firm Used To Defraud Investors With Phony Purchase Offers

TRENTON – Attorney General Peter C. Harvey has obtained a court order to seize a bank account containing about $2.5 million and shut down phone lines of a fictitious company, Heritage Financial Inc., which was used as a front by con artists who defrauded stockholders by making false offers to purchase stock shares at inflated prices. Victims were asked to pay thousands of dollars in up-front transaction fees, but the stock purchases were never completed.

Superior Court Judge Kenneth S. Levy of the Chancery Division, Essex County, signed the order late yesterday granting the relief requested by the Attorney General and the New Jersey Bureau of Securities within the Attorney General’s Office. The fraudulent scheme was conducted entirely through the Internet, with no legitimate physical address given for Heritage Financial Inc. or its officers and employees. The company’s Website at www.heritagefinancialinc.com claimed the company was based at 103 Franklin Corner Road, Trenton, N.J. That address does not exist.

"We acted quickly to both shut down this fraudulent securities scheme and seek to recover funds lost by innocent investors," said Attorney General Harvey. "These con artists used the Internet to convince people that their fictitious company had the approval of various regulatory agencies, which also were illusory. Fortunately, some of those who were targeted contacted legitimate authorities when they recognized the No. 1 red flag for securities fraud – the offer was simply too good to be true."

"The investing public should beware of fake Web sites that con artists may use to prop up their scams. As in this case, the sites may look legitimate and purport to be official Web pages of regulatory agencies," said Franklin L. Widmann, Chief of the New Jersey Bureau of Securities. "We urge people to call the Bureau of Securities if they have any doubt about the legitimacy of such a site."

Several names were listed on the Heritage Financial Inc. Website as officers of the company or were used by persons who contacted victims, including Tim Bailey, David Cairns, Gordon Currie, Richard Osbourne and Anthony Santoro. However, the names may well be fictitious.

Individuals holding low-performing stocks were targeted with cold calls and offered prices for their shares far exceeding market value. They were told that to complete the sale, they must pay an up-front fee, which the con artist usually called a "fully refundable penalty restriction bond," represented as being for the purpose of protecting investors from fraud.

The victims were asked to wire the money to accounts at Bank of America in Tampa, Fla., or International Registry Group Corporation, an escrow agent. Money was transferred from Bank of America to a Panamanian bank, Banco Uno S.A. Panama, which has an office in Miami. It appears that money was transferred to an offshore account, using the Banco Uno account as a clearinghouse. It is believed that there were hundreds of victims, including many living outside of the United States. The seized account at Bank of America contains about $2.5 million.

When people questioned the legitimacy of Heritage Financial Inc. or the purchase offer, they were directed to telephone one of several regulatory agencies that the con artists fabricated and falsely portrayed as legitimate on Internet sites, including the International Exchange Regulatory Commission, the International Securities Department, the Regulatory Compliance Commission, the Securities Protection Agency and the International Registry Corp.

In fact, all of the phone numbers provided by the defendants were linked to the same computer or network of computers through an Internet service that allows personal computers to serve as telephones. The defendants had an account with an Edison-based telecommunications company that allowed them to establish dozens of computer-linked telephone numbers, including numbers with out-of-state area codes.

The Bureau of Securities is continuing its investigation to track down the perpetrators who opened the bank and telecommunications accounts.

Deputy Attorney General Megan Harris is handling the case for the Attorney General. It is being investigated for the Bureau of Securities by Investigators William Hoefling, Adam Heck and Patrick Uket.

Investors can telephone the Bureau of Securities at 973-504-3600, or call toll-free from within New Jersey at 1-866-838-6240. They also can reach the Bureau through its Web site www.njconsumeraffairs.com/bos.htm.

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