U.S. authorities have charged a Florida man for allegedly defrauding senior investors of more than US$26 million with an investment scam that used fake financial firm websites to lure victims.
The U.S. Securities and Exchange Commission (SEC) announced securities fraud charges against Denis Sotnikov and numerous companies for perpetrating the scheme that used online ads to target U.S. investors who searched for high-yield deposits.
The SEC alleged that the ads linked to “spoofed” websites that mimicked the sites of legitimate financial institutions, which then directed investors to call “account executives” that impersonated real registered reps.
The imposters were “often impersonating an actual employee of the spoofed firm and using the real employee’s name and FINRA [registration] number,” the SEC said.
Investors were directed to wire funds to so-called “clearing” partners, which, the SEC alleged, were “used by Sotnikov to launder and misappropriate investor funds.”
The regulator charged that the scheme involved spoofing the websites of at least 24 real financial firms, generating over US$26 million in known losses to investors, many of whom were older and lost their retirement savings to the scheme.
The SEC is seeking the return of allegedly ill-gotten gains with prejudgment interest and penalties.
In a parallel action, the U.S. Attorney’s Office for New Jersey also charged Sotnikov with money laundering.
The allegations have not proven.
“As alleged in our complaint, investors were swindled out of millions of dollars through a web of fake websites and concealed identities,” said Steven Peikin, co-director of the SEC’s enforcement division.