Long Island is a well-known playground for New York City’s rich and famous, but who knew that beyond the surface of its glittering waterfront towns and toney estates lurked a hotbed of scam artists targeting seniors and other unsophisticated investors.

To weed them out, the Securities and Exchange Commission today marched to court, bringing charges against several Long Island, N.Y.-based boiler rooms already previously sued for defrauding the elderly and susceptible. All told, vulnerable investors have been defrauded out of more than $12.5 million in these aggressive pump-and-dump schemes, the agency said.

The SEC’s charges today allege that First Choice Healthcare Solutions Inc. CEO Christian Romandetti and four others manipulated the company’s shares, generating more than $3.3 million of illegal profits and more than $560,000 in kickbacks for Romandetti.

According to the SEC, Romandetti and the other defendants duped more than 100 victims in a scheme that inflated First Choice’s stock price from less than $1 per share to $3.40 per share.

According to the complaint, from at least September 2013 until about June 2016, the defendants used multiple accounts in an attempt to disguise their trading, engaged in manipulative trading practices and hired Elite Stock Research, a boiler room run by one of the defendants, Anthony Vassallo, to promote First Choice to vulnerable investors, some of whom invested retirement savings. Investors lost approximately $2.5 million in the trading scheme, the suit alleges.

“Investors should be on the lookout for individuals employing methods like the ones we allege in our complaint—such as using unsolicited calls and high-pressure sales tactics,” said the SEC’s Associate Director of Enforcement Carolyn M. Welshhans. “Microcap fraud continues to be a pervasive source of harm to retail investors.”

The SEC filed its case today in federal district court in Central Islip, New York, charging Romandetti, Vassallo, Mark Burnett, Jeffrey Miller, Frank Sarro and Elite Stock Research with fraud and Burnett, Miller, Sarro and Vassallo with market manipulation. The SEC is seeking permanent injunctions, return of allegedly ill-gotten gains with interest, civil penalties, penny stock bars, and officer-and-director bars against Romandetti and Burnett. 

In a parallel action, the U.S. Attorney’s Office for the Eastern District of New York announced parallel criminal charges against Romandetti, Burnett, Miller and Sarro.

The SEC said investigations are continuing in the cases. The agency is coordinating not only with the U.S. Attorney’s Office for the Eastern District of New York for assistance, but also the Financial Industry Regulatory Authority (Finra) and the Federal Bureau of Investigation for assistance in its attempts to root out scam artists.

In a related action in July 2017, the SEC charged Elite Stock Research, as well as another Long Island boiler room and 13 individuals, with bilking victims out of more than $10 million through high-pressure sales tactics and lies about penny stocks. Seven of those individuals have pleaded guilty to parallel criminal charges brought by the U.S. Attorney’s Office for the Eastern District of New York. The SEC’s litigation against the 13 individuals is continuing.

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