SEC Says Old-Timer Took a Free Ride
MANHATTAN (CN) - Sixty-seven-year-old Ronald Feldstein defrauded investors of $2.5 million through his two companies, Mara Capital Management and Vita Health of America, the SEC claims in court.
The SEC sued Feldstein, 67, of New York City, Mara Capital and Vita Health, and relief defendant Trademore Capital Management, all of which he runs out of his house.
In the federal lawsuit, the SEC claims Feldstein ran "a two-part fraudulent securities scheme that began in late 2008 and continued to late 2011."
In part one, which lasted from December 2008 through February 2009, Feldstein, Mara and Vita defrauded three broker-dealers of more than $2 million, the SEC says in the complaint.
In part two, from 2009 through 2011, "Feldstein bilked several investors out of more than $450,000 through several fraudulent offerings of securities," according to the SEC.
The SEC calls it a "free-riding scheme."
Feldstein claimed that Mara and Vita were investments funds, though they actually were "thinly capitalized entities that he owned and controlled for his own personal trading."
He opened trading accounts at three broker-dealers, in Mara and Vita's names, "then defrauded the broker-dealers by making large stock purchase orders through them for which defendants had neither the means nor the intention to pay with their own funds," the SEC says in the complaint.
It was, in short, a plan "to trade risk-free with these broker-dealers' money," the SEC says.
After losing $2 million of the broker-dealers' money, he "shifted his fraudulent conduct to several individual investors," for whom he lost $450,000, the SEC says.
He spent the money on "a luxurious lifestyle that involved a Bentley automobile, summers in the Hamptons, and casino junkets," according to the SEC complaint.
The SEC seeks disgorgement, penalties, and an injunction.