Two self-proclaimed experts at trading stocks who used infomercials and hotel seminars to tout their abilities have been indicted on federal fraud charges.
Linda Woolf, 48, of Sandy, Utah, and David Gengler, 34, of Draper, Utah, passed themselves off as successful investors and persuaded consumers to pay anywhere from $3,000 to $40,000 to learn the "Teach Me to Trade" stock picking system, according to an indictment in U.S. District Court in Alexandria.
Prosecutors say Woolf and Gengler lied or omitted pertinent information about their profits in the stock market and their annual gains and losses during presentations given at hotel seminars across the country. One of Teach Me to Trade's supposed stock trading experts was actually recruited by Woolf from a nail salon, according to the indictment.
Woolf and Gengler also were featured in Teach Me to Trade infomercials. In one, Gengler explains how he doubled a $10,000 investment in one week as the studio audience oohs and aahs.
"Luck has absolutely nothing to do with this," Gengler tells the audience. "This is simply a system. If you can follow the rules ... you can find your financial future."
Woolf and Gengler worked as independent contractors, according to the indictment, and received sales commissions of 10 percent to 15 percent from Teach Me to Trade, which is a part of the Whitney Information Network, a publicly traded company based in Cape Coral, Fla.
Whitney itself is not charged, though the indictment says Woolf and Gengler relied on the company's "fradulent marketing efforts" to entice the public to their seminars.
The charges against Woolf and Gengler, which include wire fraud and conspiracy to commit mail and wire fraud, carry maximum penalties of 30 years in prison. The Securities and Exchange Commission also has filed civil fraud charges against them.
Calls to their attorneys were not immediately returned Tuesday.
A spokeswoman for Whitney said she was not familiar with the charges and could not comment. In its 2007 annual report, Whitney said it was notified in late 2006 of investigations by the SEC and federal prosecutors.
At the seminars, which were attended mostly by senior citizens, Woolf and Gengler allegedly helped consumers talk their credit card companies into increasing their spending limits so they could purchase expensive Teach Me to Trade training materials.
The seminars also employed "success coaches" who would review an individual's financial portfolio to target wealthier individuals for more expensive sales, according to the indictment.
Whitney estimates about 28 percent of the people who attend its various free introductory workshops _ which also include topics on real estate investing and managing cash flow _ end up purchasing some type of training course.
In 2006, the company had earnings of $1.8 million on revenue of $225 million. Whitney stock, which trades over the counter, was unchanged at $1.76 per share on Tuesday.