Securities Law Blog

The owner and four employees of Gryphon Holdings Inc. were arrested April 20, 2010 for allegedly operating an internet-base scam that misled investors into paying fees for phony stock tips and investment advice. The president of the Staten Island financial advisory firm, Kenneth Marsh, and four others have been charged with conspiracy to commit securities fraud and wire fraud and a single count of wire fraud. If convicted they could each face up to 20 years in prison, according to the U.S. Attorney’s office in Brooklyn, NY.

The Securities and Exchange Commission (SEC) also filed civil charges against the firm, Marsh, and the four employees.

The SEC alleges that since at least 2007 Gryphon used numerous material misrepresentations to lure clients to purchase its services. Gryphon allegedly fabricated advisor credentials, including possessing valuable experience with major Wall Street firms and degrees from prestigious academic institutions. The firm allegedly claimed to have offices around the world, when in reality they operated their dealings from a Staten Island strip mall.

According to prosecutors, the majority of the victims are reported to being elderly retirees who received unsolicited emails and telephone calls promoting the firm’s services.

The advisory firm allegedly charged between $99 and $250,000 for securities recommendations which the SEC said were falsely claimed to have been based on “sound research and successful strategies of trading experts with superior knowledge.”

According to the SEC complaint, over the course of the past three years, Gryphon acquired more than $17.5 million for fees and services.