URGENT >> BULLETIN >> MOVING: Florida Attorney Charged Civilly, Criminally In Alleged ‘Commodities Online’ Caper; 2 Principals (With Felony Convictions) Also Charged
URGENT >> BULLETIN >> MOVING: Florida attorney Michael R. Casey has been charged both civilly and criminally in the alleged Commodities Online fraud scheme, the SEC said.
Also charged criminally and civilly were former Commodities Online executives James C. Howard III and Louis N. Gallo III.
“This trio teamed up to employ all the hallmarks of an investment scheme,” said Eric I. Bustillo, director of the SEC’s Miami Regional Office. “Howard met with prospective investors at a luxury hotel to emanate a false sense of wealth and security, Gallo oversaw an in-house boiler room that drummed up investor interest, and Casey was the company’s purported legal counsel who acted anything but lawyerly.”
Both Howard and Gallo were convicted felons prior to emerging as executives at Commodities Online, the SEC said. The fraud caper allegedly gathered $27.5 million.
From the SEC complaint (italics added):
In reality, COL performed only a limited percentage of the commodities transactions it promised investors. Instead, the Company, Howard, and Gallo dissipated millions of dollars of investor funds to largely sham companies, including Relief Defendants Sutton Capital, LLC, J & W Trading, LLC, American Financial Solutions, LLC, and Minjo Corporation. Through these companies, Howard and Gallo misappropriated investor funds for their own use. So-called profits they distributed to investors they took largely from other investors’ funds.
Casey personally made misrepresentations to investors about the profitability, structure, and existence of the purported commodities contracts. He also knew about Howard’s misappropriation of investor funds, but failed to disclose this fact when he communicated with investors.
Howard, 53, resides in of Lauderhill, Fla.
“In 1997, Howard was convicted of federal narcotics and firearms felonies and sentenced to 57 months in prison,” the SEC said.
Gallo, 43, resides in Parkland, Fla.
“In 2005, Gallo pleaded guilty in the United States District Court for the District of New Jersey to bank fraud and narcotics charges and was ultimately sentenced,” the SEC said. “In 2007, in the same court, he pleaded guilty to transmitting a threat to injure and was later sentenced to one day in prison and a three-year term of supervised release.”
Casey, 65, resides in Oakland Park, Fla.
“He is an attorney licensed to practice in Florida,” the SEC said. “In early 2010, Casey acted as COL’s outside legal counsel. In May 2010, he replaced Howard as president of COL.”
From the SEC complaint:
In May 2010, COL issued a press release announcing Howard was stepping down from his COL management position but would “remain in a consulting relationship with [COL] and will continue to provide the company with the benefit of his many years of experience in the commodities business.” While the press release announced that Casey would replace Howard as president, it did not disclose Howard’s arrest [in a separate alleged fraud scheme]. Gallo and Casey were aware of the press release, which at least one of COL’s sales agents circulated.
The SEC initially moved against Commodities Online last year. Today’s complaint names individual defendants and companies that allegedly received ill-gotten gains.
Howard was arrested by the Boca Raton Police Department in a separate scheme targeting Haitian Americans on March 5, 2010. About six months later — in September 2010 — he was sued by a Nevada company that listed former AdSurfDaily member and Surf’s Up moderator Terralynn Hoy as a director.
The Nevada company — SSH2 Acquisitions Inc. — alleged that Howard was part of a Ponzi scheme that also involved Patricia Saa, Sutton Capital LLC and Rapallo Investment Group LLC.
Howard and the defendants, according to the lawsuit, told SSH2 it was trading in commodities and “would produce profits of 40% per month or more, while not risking any of the invested funds.”
In its lawsuit, SSH2 alleged that its dealings with Howard and the others began in “early 2009″ and continued through March 2010.