SEC Settles with Two Defendants in Boiler Room Scam

The U.S SEC has settled with two defendants, Emin Cohen and Dennis Verderosa charged for their roles in a $10 million boiler room scam. The watchdog settled with 5 out of 13 people involved in the fraud.

September 22, 2020 | AtoZ Markets –  The United States Securities and Exchange Commission (SEC) announced that it has settled with two individuals charged for their roles in a $10 million boiler room scheme.

In a Complaint filed in 2017 in the United States District Court for the Eastern District of New York (EDNY), the SEC alleged that Emin Cohen, Dennis Verderosa, and others, had engaged in a fraudulent scheme using threatening and deceitful sales tactics to pressure retail investors to purchase penny stocks.

The defendants also used the information they learned about the victims' purchase orders to facilitate the placement of opposing sell orders to dump shares owned by participants in the fraudulent scheme.

Cohen and Verderosa pled guilty to boiler room scam

In a parallel criminal action, Cohen and Verderosa pleaded guilty to boiler room scam, and they were, respectively, sentenced to 24 and 72 months in prison plus three years of supervised release. The EDNY entered final Consent Judgments against Cohen and Verdorosa, who, as set forth in the SEC Release, are enjoined from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the broker-dealer registration provision of Section 15(a) of the Exchange Act.

The final judgments order the two defendants to disgorge $136,373 and $383,344 respectively, plus prejudgment interest, all of which is deemed satisfied by the forfeiture and restitution ordered in the parallel criminal action. The judgments also impose penny stock bars. These judgments follow the June 11, 2020 announcement of final judgments obtained by consent against three other defendants in the case. In a separate settled administrative proceeding, Cohen was barred from the securities industry.

What is boiler room scam?

This is a type of fraud that usually involves unsolicitedly contacting the investors, generally by phone, with lucrative offers to sell them shares and/or other financial instruments is known as boiler room fraud. The financial products that they offer also enlist term deposit accounts, management accounts, investment in crowdfunding, investment advice, etc.

In addition, the boiler rooms claim themselves to have the authorization to provide their services with professional websites. In reality, however, they are scammers that offer fictitious or worthless products or shares. The term “boiler room” came as the swindlers running such operations often do not hesitate to put the investor under severe pressure.

In order to protect yourself, we urge all potential investors to check the registration of any individuals or companies who offer investment opportunities to them before making any investment.

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