Man Pleads Guilty to $50m Investment Fraud Scheme
A Californian man has admitted his part in a $50m conspiracy to defraud scores of investors via lookalike scam websites.
Allen Giltman, 56, of Irvine, pleaded guilty to one count of conspiracy to commit wire fraud and one count of conspiracy to commit securities fraud.
For eight years up to October 2020, he’s said to have conspired with others to build and run websites to solicit funds from investors. Many were designed to look like legitimate sites run by financial institutions or non-existent but legitimate-seeming companies.
To enhance the sites’ legitimacy, the conspirators would falsely claim their ‘institutions’ were regulated by the Federal Deposit Insurance Corporation (FDIC), the Financial Industry Regulatory Authority (FINRA), the Securities Investor Protection Corporation and the New York Stock Exchange.
They claimed deposits would be protected and used real names and logos of the companies they impersonated.
Lured in by higher-than-average rates of return on their certificates of deposit (CDs), the victims usually found the sites via internet searches, according to the Department of Justice (DoJ).
Giltman typically fielded introductory calls and emails from these victims, impersonating real FINRA broker-dealers using their names and FINRA Central Registration Depository numbers. He then provided would-be investors with application forms and instructions on how to wire funds for CD purchases.
In reality, no investor ever received a CD, and their funds were apparently moved to various international bank accounts in Russia, Georgia, Hong Kong, and Turkey.
Investigators identified around 70 victims of the nationwide scheme and as many as 150 scam sites.
Giltman faces a maximum jail term of 25 years and will be forced to pay $500,000 or twice the gross amount of gain or loss from each offense, whichever is greater. He is also facing a civil complaint filed yesterday by the SEC.
Investment fraud is among the highest-grossing cybercrimes, according to the FBI. It revealed that over $336m was lost to fraudsters in 2020, more than any other crime type bar romance scams and business email compromise.
Over 8700 victims were identified during the reporting period.