SEC Charges Previously-Barred Broker and His Firm with Offering Fraud
The Securities and Exchange Commission has charged a broker previously barred by the Financial Industry Regulatory Authority, and his wholly-owned firm, for a multi-year offering fraud that defrauded at least 10 investors of approximately $1.6 million.
The Securities and Exchange Commission has charged a broker previously barred by the Financial Industry Regulatory Authority, and his wholly-owned firm, for a multi-year offering fraud that defrauded at least 10 investors of approximately $1.6 million.
According to the SEC’s complaint, Christopher Fulco of Staten Island, through his company JM Capital Holdings LLC, cold-called investors, including many elderly retirees, and solicited investments in a number of private companies, some of which he claimed were about to substantially increase in value following initial public offerings.
The SEC alleges, however, that Fulco and his firm never invested the money in the manner represented and instead used the money to fund his lifestyle, spending significant portions for gambling, vacations, mortgage payments, child support, luxury goods, cash withdrawals, and restaurant meals.
Fulco also allegedly transferred almost $100,000 of investor money to his ex-fiancé, Jamie Milione, who was named as a relief defendant in the complaint.
Throughout the three-year offering fraud, the SEC alleges that Fulco used a series of aliases to conceal his true identity from investors and created fictitious documents to induce investors to transfer money to JM Capital.
In one instance, when one investor expressed his family’s concerns over the continued solicitation of funds for additional fees and requested reassurance, Fulco created a new alias— “Michael Barron”—and posed as JM Capital’s chief compliance officer.
Using this new false identity, the SEC claims that Fulco told the investor that JM Capital was in compliance with local, state, and federal securities laws and that it was audited annually by the “banking division” and the SEC. The SEC said that the misstatements gave comfort to the investor who gave an additional $10,300 to JM Capital on behalf of himself and his son, who was also an investor.
Fulco was barred by FINRA in April 2014 for participating in private securities transactions without first providing written notice to his affiliated firm, vFinance Investments Inc., a subsidiary of National Holdings Corporation.
The past complaint also alleged that Fulco made numerous false statements while under oath during his FINRA testimony and “encouraged an individual associated with his private securities transactions not to cooperate with FINRA’s investigation and asked him to provide false testimony to about the transactions.”
Since 2002, Fulco was affiliated with 15 brokerage firms, including Avenir Financial Group and Caldwell International Securities which were expelled by FINRA in 2016 and 2017, respectively.
