Sales Agents Face Criminal Charges for Role in Football Laser Scam
When people watch an NFL game, they probably are not thinking about securities fraud. Yet a piece of technology designed to improve the fan experience of watching football is at the center of a massive securities fraud scheme that has prompted multiple civil and criminal prosecutions. In the latest development, a federal grand jury in Miami recently indicted eight Florida residents for their alleged role in the scheme.
United States v. Eratostene, et al.
Alan G. Amron founded Thought Development, Inc. (TDI), a Miami Beach-based company, in 2010. TDI’s key product was a “laser-lined system designed to mark first downs in professional and college football games.” Traditionally, football leagues use physical chains to measure first downs. TDI claimed its First Down Laser System would do the job faster, leaving “more time to be sold to television advertisers.”
TDI never registered any public stock offering with the U.S. Securities and Exchange Commission, which led to civil litigation and ultimately a settlement with the company and Amron. The eight defendants in the present criminal case all worked as sales agents who marketed the unregistered TDI stock to investors. According to the grand jury’s July 23 indictment, the agents knowingly made false statements regarding the “safety and profitability of TDI stock” and further used investor funds “for their personal use.”
The sales agents allegedly relied on telemarketing to elderly investors. The agents claimed TDI was about to conduct an initial public offering and that the company’s laser system “would be used during NFL pre-season games or in the Super Bowl.” The agents purportedly told investors the price of TDI stock more than tripled once these events occurred.
In fact, the NFL never agreed to use TDI’s laser system, in part because it posed “a potential risk of blindness to players on the football field.” More to the point, the grand jury alleged the sales agents misappropriated most of the funds solicited from investors for themselves. According to the indictment, the agents “caused over 200 individuals to invest in TDI, over three-fourths of whom were over the age of 55, and raised approximately $2.4 million in sales of TDI stock,” almost all of which went to the defendants “as undisclosed commissions and fees.”
Each of the eight sales agents face multiple charges of wire fraud and mail fraud. As always, the defendants are presumed innocent unless and until convicted in a court of law.
The Risks of Answering a “Cold Call”
The defendants in this case are accused of cold calling elderly individuals on “lead lists,” who were then forwarded to other sales agents. While cold calling is a common (and legal) sales tactic, many securities fraud schemes rely on high-pressure sales tactics used to mislead potential investors. Often times, sales agents will promote “once-in-a-lifetime” opportunities and tout companies with “breakthrough technologies” like TDI, yet they fail to provide even basic information about the security itself. In many cases, these agents are in fact peddling unregistered securities.
If you have been the victim of a high-pressure sales pitch that turned out to be a scam, you should speak with a Florida securities fraud attorney right away. Contact Gregory Tendrich, P.A., in Boca Raton today if you need any legal advice in this area.