Washington D.C., Sept. 3, 2013 —
The Securities and Exchange Commission today charged a purported money manager in New York with conducting a free-riding scheme to defraud three brokerage firms, and then bilking several investors out of nearly a half-million dollars that he stole to fund his luxurious lifestyle that included a Bentley automobile, summers in the Hamptons, and casino junkets.
The SEC alleges that Ronald Feldstein caused more than $2 million in losses for the brokerage firms that he victimized in the free-riding scheme, which occurs when customers buy or sell securities in their brokerage accounts without having the money or shares to actually pay for them. Feldstein opened three separate brokerage accounts in the names of two purported investment funds that he created. He had no intention to pay for the stocks that he purchased if they resulted in big losses. Feldstein planned to walk away from any transactions where the price declined substantially after the trade date, and planned to use sales proceeds to pay for the purchases if the price of a stock increased.
The SEC further alleges that Feldstein later began soliciting investments by targeting owners of businesses that he had frequented for decades, including a dry cleaner and a car leasing and servicing company. Feldstein convinced them to provide funds for him to invest on their behalf, promising such profitable opportunities as a successful hedge fund, a promising penny stock, and an initial public offering (IPO) of a fashion company. However, Feldstein never invested this money, instead converting it for his personal use without their knowledge.
“Without sufficient assets to pay for his stock purchases, Feldstein illegally arranged trades in which he got the profits if he won and left brokerage firms holding the bag if he lost,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office. “Then Feldstein used blatantly false promises to lure longtime acquaintances to pour their life savings into his investment schemes that were footing the bill for his luxurious lifestyle.”
According to the SEC’s complaint filed in U.S. District Court in the Southern District of New York, Feldstein and the two purported investment funds – Mara Capital Management LLC and Vita Health of America LLC – traded through a type of account that brokerage firms offer to customers with the understanding that the customer has sufficient assets held with a third-party custodial bank to cover the cost of the trades. Feldstein and the funds never disclosed to three broker-dealers that they were simply gambling with the brokerage firms’ money. Their plan was to refuse to issue instructions to settle the trades, and stick the broker-dealers with the unprofitable positions. The free-riding scheme began in September 2008 and continued until February 2009.
According to the SEC’s complaint, Feldstein shifted his fraudulent conduct to individual investors later in 2009. He induced investors to give him money they typically had saved for their retirement or their children’s education. Feldstein raised approximately $450,000 based on such false investment promises as a hedge fund that he described as substantial and successful, a penny stock issuer that Feldstein described as the next AT&T/Verizon of the rural Midwest, and the IPO of a purported fashion company. The investor funds were typically deposited into Feldstein’s personal bank account or the bank account of an entity that he owned so he could spend their money on his personal expenses.
The SEC’s complaint charges Feldstein, Mara Capital, and Vita Health of America with committing violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. Feldstein also is charged with violations of Section 17(a) of the Securities Act of 1933. Trademore Capital Management LLC is charged as a relief defendant.
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4 comments:
Ronnie Feldstein is actually partners in this scam with Brett and Matt Hirsch of A.R. Barron fame. When Brett got out of jail after 5 years, he teamed up with his brother and Ronnie in the scam and made millions! Brett rounded up about 50 guys he was in jail with and directed them to open hundreds of accounts at brokerage firms and buy millions of dollars in stock with the understudying that only profitable trades would be paid for and accepted. There are millions of dollars in losses out there that the US Attorney does not know about because there were so many criminals opening accounts in so many corp names. They key is Brett and Ronnies old bookkeeper, Ariel Hatcher, who is scared of goig back to jail for Brett but knows every single trader and loss out there. Another "trader" that used to work for them is Scott Kupersmith who is doing 33 months at fort dix for doing about one percent of the damage that Brett, Matt and Ronnie did.
I am one of Ronnie and Bretts victims and I was personally in Feldsteins penthouse on York ave in Manhattan. He did the whole show to rope me into investing He even showed me a picture of Himself an Rudy Gulianni on his "friend" Modells private jet on the way to the world series in Arizona after sept 11th. He said he managed money for Rudy and the Modell sporting goods family. He said his two best friends were Rudy and some mob boss in jail that he sends money to. He told me he has millions all hidden in his daughters name so he is judgement proof. i personally saw him directing Brett and his cohorts to put in millions in orders to firms.
Its funny that they think the free riding scam ended in feb 2009 because that was when Ronnie got pissed at Brett for all the calls and lawsuits from the brokers and directed him to only enter trades in accounts opened by their "fronts" in corps with no connection to them. Ariel Hatch knows where the millions in losses are, he was the bookkeeper that the "traders" would call to enter profitable trades to enter. Then they would be paid by Feldstein or Brett and Matt Hirsch. Matt Hirsch even runs some type of paralegal services for law firms so he thinks he covered his bases.
He's now scamming people in need of addiction recovery like a proxy of Pax Prentiss. Seems he has moved onto insurance fraud.
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