WASHINGTON (CN) - Two pitchmen for Investools lied to customers for years to get them to sign up for "investor seminars" that cost $2,000, and "personal coaching" for as much as $20,000, the SEC says in Federal Court. Michael Drew and Eben Miller boasted at their "seminars" that "they had become wealthy trading securities," though "they were in reality unsuccessful investors," the SEC says. "Their substantial incomes were primarily from sales commissions they earned by selling Investools' products and services to investors."
The men ran their scam "at hotels throughout the United States" from 2004 to 2007, during which time they actually lost hundreds of thousands of dollars in their trades, the SEC says.
During the time Drew and Miller ran their scam, Investools was known as Online Investors Advantage, according to the complaint.
The SEC claims the company was informed by compliance personnel and "secret shoppers" that its workshop speakers were making fraudulent claims, but made no effort to stop them.
Miller, 38, claimed that he and his wife paid $35,000 for their "investing education," which enabled them to "make it into million-dollar status." Actually, the SEC says, "in 2006 and 2007, while Miller was portraying himself as a successful investor, he had tens of thousands of dollars in net trading losses."
Drew, 36, claimed "he had paid $15,000 for his first class," according to the complaint. He lied about his success in his pitches, and in one case "made a net loss of approximately $1,000 appear like a short-term trading gain of $148,000," the SEC says. He lost hundreds of thousands of dollars in trades, according to the complaint.
The SEC says Drew's and Miller's lies violated the Exchange Act and Investools negligently failed to police the pitchmen. It seeks an injunction against Drew and Miller, and civil penalties from Investools, which is based in New York City.
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