Thirteen Charged with Boiler Rooms Fraud Scheme

Thirteen Charged with Boiler Rooms Fraud Scheme

A Miami grand jury indicted thirteen people for their participation in two telephone sales room (“boiler room”) fraud schemes that targeted investors investors throughout the nation and defrauded them out of approximately $23 million. The fraud scheme operated out of Miami Lakes, FLorida, and Marina Del Ray, California.

The following defendants were charged:

  • Craig Sizer, 48, of Miami
  • Keith Houlihan, 48, of Boca Raton
  • Miguel Mesa, 56, of Miami Lakes
  • Charles K. Topping, 39, of North Bay Village
  • Anita Sgarro, 49, ofMarina Del Ray,California
  • Jack Willard Sini, 57, of Miami and Boynton
  • Jaun M. Perez Ortega, 46, of Miami Lakes
  • Charles Miller, 74, of Miami Beach
  • Jason David Hershberger, 39, of Fort Lauderdale
  • James Wayne Long, 60, of Miramar, and
  • Shawna Leigh Lynch, 44, of Fort Lauderdale

They were charged with conspiracy to commit mail fraud and substantive count(s) of mail fraud. Sizer, Houlihan, Mesa, Topping and Sgarro were also charged with a substantive count of wire fraud.

The indictment charges two, overlapping mail fraud conspiracies involving the fraudulent sale of stock shares for two companies, Sanomedics International Holdings, Inc. (“Sanomedics”) and Fun Cool Free (“FCF”).

According to the indictment from April 2009 to August 2015:

Sizer, Houlihan, Mesa, Topping, Sgarro, Sini, Ortega, Smigrod, Wheeler, Hershberger, and Lynch used false and fraudulent claims to solicit investors throughout the United States to buy shares of stock in Sanomedics, a company that sold non-contact infrared thermometers for home healthcare and for dogs. In 2009, Sizer and Houlihan allegedly hired Mesa to run a boiler room that sold restricted shares of Sanomedics stock. Mesa and Sizer prepared scripts for the sales agents that worked under Mesa, in the telephone sales room. Mesa later hired Sgarro to operate her own boiler room in California, selling Sanomedics stock. Sizer and Houlihan also sold Sanomedics stock directly to investors. In order to conceal their true identities and to further the fraud scheme, several of the co-conspirator sales agents used false names and aliases. The sales agents used sales pitches that included several materially false statements, including, but not limited to, that: stock sales did not include commissions or fees; sales agents were compensated with stock or paid by the hour; the sales agents worked directly for Sanomedics; stock purchases were safe and secure; and famous and wealthy invididuals, such as a former CEO of Apple Inc., PepsiCo, and IVAX Corp., and the “Dog Whisperer,” were either heavily invested in the company or were company representatives. In truth, the co-conspirator sales agents worked for Mesa and Sgarro, not for Sanomedics. Approximately 80% of investor proceeds were used by the co-conspirators to cover commissions and fees. The co-conspirators were not paid by the hour and did not receive stock options, but were in fact paid hefty commissions. Additionally, there were no actual endorsements by celebrities or wealthy individuals. The investors relied on the fraudulent statements. As a result of the scheme, the co-conspirators defrauded over 700 people out of approximately $21 million.

The indictment also charges that from August 2014 to December 2105, Sizer, Mesa, Topping, Sini, Perez, Smigrod, Wheeler, Miller, Long, and Lynch used a fraud scheme, similar to the one described above, to sell shares of stock in FCF, a company that claimed to own a smartphone gaming portfolio with over 500 gaming applications. Mesa oversaw the boiler room that was utilized to facilitate the fraudulent scheme. The co-conspirators used false claims, including assertions that they worked directly for the company, to defraud over 70 other investors out of $1.5 million.

On September 26, 2016, the SEC filed similar civil charges against Sizer and Mesa in federal district court in Miami.