Investing

SEC Freezes Assets in Penny Stock Sports Scam

Chris Lange

Published: December 14, 2015 1:25 pm

Last Updated: January 13, 2020 4:06 pm

The U.S. Securities and Exchange Commission (SEC) announced fraud charges and a court-ordered asset freeze obtained against a Florida-based penny stock company falsely touting itself as “the largest publicly traded diversified portfolio of professional sports teams in the world.”

In the complaint, the SEC alleges that Thomas Anthony Guerriero as CEO of Oxford City Football Club used pressure tactics and a boiler room of salespeople to raise over $6.5 million. This money was raised primarily through inexperienced investors who were misled to believe that the company was a thriving conglomerate of sports teams, academic institutions and real estate holdings.

In reality the company was losing millions of dollars each year and turning zero profit from its two lower-division soccer teams in the United Kingdom.

According to the SEC’s complaint:

• Since at least August 2013, Guerriero has operated a classic boiler room scheme under the guise of nominal legitimate businesses through which millions of unregistered shares of stock were sold to investors who were deceived about the stock value and potential profits.
• Guerriero’s salespeople sold Oxford City stock to the public based on leads lists he purchased from third parties. Guerriero crafted scripts for the salespeople, who used aliases to mask their true identities.
  Prospective investors were told they were being offered a limited-time deal to purchase Oxford City shares at a deep discount from the publicly quoted price. Unbeknownst to the victims, the stock price was controlled by Guerriero.
• Guerriero claimed to record phone conversations with potential investors using a “verbal verification system” that supposedly tied the stock “transaction” to their social security number and birthday. In reality, Guerriero and his associates simply pressed any button on their phone to make a sound signaling the fake start of a recording. If investors later refused to pay, Guerriero would threaten them with lawsuits based on their “recorded” verbal commitment.
• Investors were falsely told that Oxford City would pay a 50-cents-per-share dividend within a year. In reality, the company was losing millions of dollars a year and was legally prohibited from paying a dividend.
• Oxford City purportedly had real estate holdings worth approximately $100 million and owned a radio broadcast network that projected profits of almost $20 million. Oxford City actually had assets of approximately $1 million and never owned a radio station – it simply purchased one hour of air time per week.
• Oxford City claimed to own an online university with students already enrolled and projected profits of $495 million for the upcoming five-year period. In reality, there was no such university that ever enrolled a student or had revenue.
• Oxford City purported it would earn more than $238 million over five years from existing and new sports-related facilities. The truth was that Oxford City owned a minority interest in a lower division English soccer club, which generated a small amount of revenue but never turned a profit.

Scott Friestad, Associate Director of the SEC Enforcement Division, said:

As alleged in our complaint, Guerriero portrayed himself as one of the most powerful and influential CEOs in the history of Wall Street when he’s really a penny stock fraudster mixing lies and verbal threats to line his own pocket with money from unsuspecting investors.