A group of Nigerian nationals stole millions from investors by impersonating actual registered reps at prominent advisory firms, even using voice impersonation software to pull off their scheme, according to dual charges filed by the Justice Department and the Securities and Exchange Commission.
The commission charged Chibuzo Augustine Onyeachonam, Stanley Chidubem Asiegbu and Chukwuebuka Martin Nweke-Eze with fraud in New Jersey federal court today. It accused them of impersonating “legitimate” brokers and advisors and stealing over $2.9 million from at least 28 investors.
SEC Enforcement Division Acting Director Sanjay Wadhwa said the charges highlighted how fraudsters “can use technology to gain trust with investors.”
“We caution the investing public to be on heightened alert when investing with someone who is soliciting investments through social media, even if that person appears to be a financial industry professional,” Wadhwa said.
Starting in 2019, the defendants (none of whom are registered securities professionals) created websites impersonating at least 22 brokers and investment advisor representatives “at prominent U.S. securities firms” (neither the firms nor the impersonated reps are named in the complaint).
To carry out the alleged scheme, the defendants created websites with the impersonated reps’ actual first and last names and formed limited liability companies using those names to make it seem like they had their own investment firms. They then made websites using the reps’ employment history and credentials from FINRA’s BrokerCheck site or the SEC’s Investment Adviser Public Disclosure records. The defendants also created YouTube profiles and falsely generated comments from imaginary clients underneath investment-themed videos touting the impersonated reps’ supposed credibility. They also used fake LinkedIn profiles and entered group chats in encrypted messaging apps to reach out to victims.
According to the commission, the schemers mainly impersonated female advisors and used voice-changing software to hide their true identities.
When talking with potential victims, the defendants promised 15% to 25% monthly returns, telling them to download legitimate trading apps and open accounts at genuine b/ds and crypto trading platforms. They then instructed the victims to give them the account info so they could “sync” the investor’s accounts with a purported copy trading program (which was allegedly a way to scam clients into thinking their investments were successful, the SEC claimed).
As part of the scheme, the defendants urged clients to fund their brokerage and crypto accounts at a 20:80 or 10:90 ratio, meaning most of their money was in crypto. They’d then tell clients to use the crypto funds to purchase Bitcoin and send it to an address to “fund” the investment, an address that was created by the defendants, according to the complaint.
The defendants would then funnel the crypto money to steal it, mostly leaving the brokerage funds untouched (though some brokerage funds were later used to “further ‘fund’” the victims’ purported crypto investments).
The defendants told the investors they could view their account balances on fake platform websites like LumenTrades, Wealthwindow or MyNuvoakOnline.com, which they had created. According to the complaint, Onyeachonam was involved in setting up the websites, incorporating some of the LLCs, setting up fake platforms and impersonating reps.
“According to Onyeachonam’s public Goodreads profile, 15 days after Onyeachonam registered the Lumentrades.com domain in 2018, Onyeachonam read The Confidence Game: Why We Fall for It . . . Every Time (Penguin Books 2017), a book written by Maria Konnikova and described by The Washington Post as an ‘unnerving manual for conning and getting conned,’” the complaint read.
The SEC’s complaint called for a jury trial (though it is unknown if the defendants still reside in Nigeria) and sought permanent injunctions, disgorgement with interest and civil penalties. The defendants couldn’t be reached for comment prior to publication.