Florida residents, James Howard, III and Louis Gallo, III both from Parkland; Patricia Saa from Naples; Michael Casey, an attorney from Oakland Park; and Rita Balbirer from Pompano Beach (collectively “Defendants”) have been charged by federal prosecutors with a total of 22 criminal counts, including conspiracy, fraud and money laundering. Each fraud count carries a maximum sentence of 20 years, while a count of money laundering carries a maximum sentence of 10 years.
The Securities and Exchange Commission announced that it has also filed a parallel case against Howard, Gallo and Casey for violations of federal securities laws.
According to the recently unsealed federal indictment and the SEC’s complaint, the Defendants conspired to defraud individuals who invested through Commodities Online, LLC (“COL”). Howard was the founder and former president, Gallo was the vice president and Casey was the outside counsel who later took over as president.
According to the FBI and the SEC, between approximately January 2010 and April 2011, the Defendants made materially false and fraudulent misrepresentations to over 700 investors to induce them to invest more than $27.5 million through COL. The Defendants allegedly told investors they were buying participation units in unregistered private securities tied to physical commodities transactions for which COL had supposedly already secured a buyer and a seller for the commodity.
The FBI alleges that COL promised returns from between 3% and 33% in as little as 15 days. In reality, according to the SEC, COL executed only a fraction of the commodities transactions promised to the investors and instead used monies from later investors to pay earlier investors in typical Ponzi scheme fashion. According to the FBI, some or all of the Defendants also misappropriated over $1.3 million of investors’ funds for their own purposes.