U.S. authorities charged three Nigerian men in connection with an alleged scheme that involved duping investors by impersonating actual U.S. financial advisors in an elaborate online scam.
The U.S. Securities and Exchange Commission (SEC) charged three men — Chibuzo Augustine Onyeachonam, Stanley Chidubem Asiegbu and Chukwuebuka Martin Nweke-Eze — with securities fraud for carrying out a scheme that involved creating websites using the information of at least 22 legitimate advisors from prominent U.S. securities firms, and posting fake comments about their investing success on social media and online chats, to lure victims into investing with them.
According to the SEC’s complaint, starting in 2018, they operated a scheme that involved registering domain names and forming limited liability companies using the real names of actual advisors from high-profile firms. They also copied the details of their actual employment history and credentials from U.S. regulators’ public disclosure websites (FINRA’s BrokerCheck and the SEC’s IA database), onto the sites, touting their expertise. And, they used fake LinkedIn profiles and YouTube accounts to post comments touting the spoof websites.
The SEC said that the men primarily impersonated female advisors, and used voice-changing software to help with the scheme.
Once they lured victims to their fake sites, they allegedly recommended an investment allocation strategy that they claimed would generate monthly profits of 15%-25%. And, they typically instructed the investors to download legitimate trading apps, open accounts at genuine broker-dealers and cryptoasset trading platforms and then provide them with the accounts’ login credentials so that the investors’ accounts could be synced with their “copy trading” programs.
They also directed the investors to purchase Bitcoin to fund their crypto investments, and to send it to specific addresses to fund their investing — accounts that the defendants secretly controlled and used to divert the assets.
The SEC alleged that the three men stole at least US$2.9 million from at least 28 investors, including 23 U.S. investors, through the scheme.
In a parallel criminal case, the three men were also charged with identity theft, wire fraud and various conspiracy counts in the U.S. district court for New Jersey.
None of the allegations have been proven.
“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 division of enforcement, in a release.
“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,” he added.