18 Indicted for Fraud in Sale of Risky Ventures
Federal charges were announced Tuesday against 18 former employees of First Commodity Corp. of Boston, alleging that they defrauded more than 2,600 investors of about $40 million.
The charges stem from an ongoing investigation in Chicago, Boston, New York, Miami and San Francisco--the largest single investigation of its kind ever undertaken by federal officials, U.S. Atty. Anton Valukas said at a news conference.
The former employees, named in a federal grand jury indictment and criminal information, are accused of using high-pressure sales tactics to persuade customers from around the country to invest in high-stakes commodity ventures misrepresented as being low risk.
More than $22 million of the investments was lost, Valukas said.
187 Counts Filed
Those named Tuesday include the failed company’s former national vice president for sales, three branch managers and 15 former sales representatives and managers from its former offices in Chicago and suburban Oak Brook, Ill., Valukas said. The criminal information includes charges by his office, while the indictment includes charges by the grand jury.
The defendants are charged with a total of 187 counts of wire fraud and mail fraud, racketeering and racketeering conspiracy.
They include David C. Connolly, 48, of Teaneck, N.J., the former national sales vice president for the company; Ross A. Barnard, 37, of suburban Hinsdale, Ill., former branch manager of the Oak Brook office, and Stephen L. Barnard, 38, of suburban Flossmoor, Ill., former house broker of the Chicago office.
If convicted, those charged could face lengthy prison terms and thousands of dollars in fines.
In the alleged scheme, customers were solicited by telephone by First Commodity sales representatives posing as phony commodities experts. Those representatives often made repeated phone calls using “scripts” handed out by managers, Valukas said.
$63 Million Lost
Investors were falsely told that “commodity trading was not risky . . . and would lead to high profits,” he said.
“In fact . . . the defendants knew almost all of (First Commodity’s) customers lost money,” Valukas said.