Owner of Stock Lending Firm Sentenced- $100 Million Stock-Loan Fraud Scheme

[nitpicker]

https://www.justice.gov/usao-sdca/pr/owner-stock-lending-firm-sentenced-eight-years-prison-his-role-100-million-stock-loan

Department of Justice
U.S. Attorney’s Office
Southern District of California

FOR IMMEDIATE RELEASE
Thursday, April 13, 2017

Owner of Stock Lending Firm Sentenced to Eight Years in Prison for His Role in a $100 Million Stock-Loan Fraud Scheme

SAN DIEGO – Jeffrey Spanier, former owner of Amerifund Capital Finance, LLC located in Boca Raton, Florida, was sentenced today by U.S. District Court Judge Roger T. Benitez to serve eight years in federal prison and pay approximately $20 million in restitution for his role in a $100 million elaborate stock-loan fraud scheme that bilked victims all over the world. Spanier was also ordered to forfeit several million dollars in assets that were the proceeds of the fraud, including cash and securities held in brokerage accounts, and a luxury home in Florida. The case was investigated by the Federal Bureau of Investigation (FBI) over an extended period of time.

Following an appeal in a prior criminal case, Spanier was re-indicted in July 2016 and October 2016 and charged with multiple counts of conspiracy, mail fraud, wire fraud, and securities fraud involving a stock-loan fraud scheme that involved two other co-conspirators – Douglas McClain, Jr. and James Miceli. A federal jury returned guilty verdicts on similar charges against McClain on May 31, 2013, and he was later sentenced by U.S. District Judge Roger T. Benitez to serve 15 years in federal prison. Miceli committed suicide shortly before that trial. McClain is currently serving his sentence in federal prison. Upon his release, McClain has been ordered to pay approximately $81.7 million to the victims of the fraud.

Spanier’s re-trial was held in November 2016. After two-weeks of trial testimony, the jury deliberated for several hours and found Spanier guilty on all 16 counts, which included conspiracy, mail fraud, wire fraud, and securities fraud. The jury also returned a special verdict finding in favor of the United States as to the forfeiture of Spanier’s cash, securities, and property.

According to trial testimony, Spanier, through his entity Amerifund Capital Finance, partnered with McClain, Miceli, and Argyll Equities, and together with his partners fraudulently induced corporate executives to pledge millions of dollars’ worth of stock the executives held in publicly traded companies as collateral for loans by falsely representing that the borrowers' stock would not be sold unless there was a default on the loan.

The evidence presented at trial showed that Argyll, the purported lender, had no cash to lend and instead survived for years by immediately selling borrowers stock on the day after the stock was pledged as collateral. The proceeds from the sale of the stock were used to fund the loans creating the appearance that Argyll had plenty of cash to lend.

The evidence also showed that Spanier, McClain, and others fraudulently induced the borrowers to make monthly interest payments on their loans by falsely representing that their collateral was safe and would be returned as long as they did not default. At the end of the loan terms, the borrowers paid off their loans. Instead of returning the stock to the borrowers, Spanier and McClain kept the money and provided false excuses about why they could not return their stock. The evidence further showed that the unauthorized sales of stock held by insiders of publicly traded companies caused the stock price to plummet which defrauded purchasers of these publicly traded securities who purchased stock through public stock exchanges.

During the trial, the government offered testimony from several executives, many of whom had faithfully paid off their loans over a period of years, completely unaware that their stocks had been sold. All testified about the frustration, emotional stress and grief they experienced when they unsuccessfully attempted to recover their stock once the loan balance was paid, and ultimately realized they were the victims of a massive fraud. Victims were located in the United States, Canada, Mexico, Panama, China, England, and Belgium. The jury rejected defense claims that Spanier was merely a broker who was unaware of the fraud scheme.
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