SEC Charges Trio With Impersonating Advisers in Fraud Targeting Retail Investors

The U.S. Securities and Exchange Commission charged a trio – none of which are in the securities industry – with fraud for impersonating legitimate securities brokers and investment advisers in an elaborate online scheme through which the defendants stole more than $2.9 million from at least 28 investors.

As alleged in the SEC’s complaint, from at least 2019 to the present, the three defendants, who reside in Nigeria – Chibuzo Augustine Onyeachonam (age 30), Stanley Chidubem Asiegbu (age 27), and Chukwuebuka Martin Nweke-Eze (age 29) – created websites impersonating nearly two dozen actual securities brokers and investment adviser representatives (collectively, representatives) at well-known U.S. securities firms as part of a fraudulent scheme to entice potential investors in the United States to invest funds with the defendants.

The defendants’ scheme allegedly involved registering internet domain names with the real first and last names of actual U.S.-based securities brokerage or investment adviser representatives – for example, “johndoe.com” – whom defendants planned to impersonate. They similarly formed limited liability companies using the names of the professionals they were impersonating to make it look like the professionals had their own investment-related firms. They also created websites that copied the real representatives’ genuine employment history and credentials from the Financial Industry Regulatory Authority’s BrokerCheck or the SEC Investment Adviser Public Disclosure websites.

The defendants allegedly lured investors to the websites by placing fictitious comments from purported clients on social media and in investment group chats praising the representatives’ trading success. Some of the fictitious entity names included Alpha Crypto Fund, CopyTradeApp, InstaForex Service, and LumenTrades.

Generally, according to the complaint, the process then included opening accounts with the impersonated broker-dealers and crypto-asset trading platforms and purchasing crypto assets, which the defendants then misappropriated.

The SEC’s complaint alleges that the defendants promised monthly returns of up to 25% and directed investors to fake online investment platforms they created to make investors think their portfolios were increasing in value. In addition, according to the SEC’s complaint, the defendants purchased voice changing software to talk to investors, as most of the impersonated professionals were women.

When investors ultimately sought to withdraw their funds, according to the complaint, the defendants informed investors that they were required to pay additional fees before funds would be released to them, effectively holding investors’ funds ransom.

“Today’s charges highlight how fraudsters can manipulate online information and use technology to gain trust with investors,” said Sanjay Wadhwa, acting director of the SEC’s enforcement division. “We caution the investing public to be on heightened alert when investing with someone who is soliciting investments through social media, even if that person appears to be a financial industry professional.”

The SEC’s complaint, filed in U.S. District Court for the District of New Jersey, charges Onyeachonam, Asiegbu, and Nweke-Eze with violating the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934, and charges Onyeachonam and Asiegbu with violating the anti-fraud provisions of the Investment Advisers Act of 1940. The SEC seeks permanent injunctions, conduct-based injunctions, disgorgement with prejudgment interest, and civil penalties against all defendants.

In a parallel action, the United States Attorney’s Office for the District of New Jersey announced criminal charges against Onyeachonam, Asiegbu, and Nweke-Eze.

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