The federal government on Thursday charged three Florida residents with conspiracy and securities fraud in a scheme using thousands of phony voicemail messages left on people's answering machines to entice them to buy certain stocks.
The U.S. attorney for the District of Columbia, Kenneth Wainstein, announced that a federal grand jury had returned an indictment against Anna Boling, Roderic L. Boling and Jeffrey S. Mills, who are accused of orchestrating the "wrong number" voicemail scheme.
In the summer of 2004, Mills and the Bolings, who were married at the time, distributed the voicemail messages to households nationwide, the government alleges. The messages were made to seem mistakenly left on answering machines, often made by a caller identifying herself as "Debbie" who wanted to pass along to a girlfriend a "hot" stock tip from a "hot stock exchange guy" she was dating, according to the authorities.
The scheme is described as a new twist on the "pump and dump" stock-fraud scam, using phony messages to talk up small, thinly traded stocks and push up their prices, and then selling their own shares at a profit. The "wrong number" scheme was the first of its kind, according to government officials, who say it drove up the combined market value of six small-company stocks by about $179 million in just 26 days two years ago.
The Securities and Exchange Commission filed a related civil lawsuit Thursday against the Bolings, Mills and Mills' company, Direct Results of Sweetwater LLC.
SEC officials also urged people to study carefully before making any investment decision and to avoid taking any investment advice from a stranger.
H. Manuel Hernandez, an attorney representing Anna Boling, declined to comment. Lawyers for Mills and Roderic Boling didn't immediately return telephone calls seeking comment.
"These defendants are charged with running a brazen scheme that manipulated our securities markets and investors," Wainstein said in a statement. "This case demonstrates the willingness of (the U.S. attorney's office) and the SEC to bring the full weight of federal regulatory enforcement against those who choose not to play by the rules of the securities marketplace."
The authorities allege that Anna Boling recorded many of the phone messages herself from her home in Altamonte Springs, Fla., while her then-husband Roderic Boling hired a telemarketer in Augusta, Ga., to distribute the messages. The government also accuses Mills of profiting from trading in at least two of the touted stocks — and paying Roderic Boling with a duffel bag full of cash at a Gulfport, Miss. casino.
In May 2005 Michael J. O'Grady, the telemarketer, pleaded guilty to one count of obstructing the SEC's investigation of the alleged scheme. He agreed to pay a $25,000 fine and $50,786 in restitution plus interest in a related civil settlement with the SEC, under which he neither admitted nor denied wrongdoing.
Anna Boling, 34, Roderic Boling, 40, both of Altamonte Springs, and Mills, 43, of Longwood, Fla., are charged with conspiracy, securities fraud and wire fraud. If convicted of all charges, each would face a maximum prison term of 45 years.
An estimated 9,500 calls were made to disposable cell phone numbers left on some messages as return numbers, government officials said. The messages were said to have prompted 1,690 complaints from people in 43 states and the District of Columbia, with 676 of them from Florida.