Thanks for reading today’s update of Guy Gentile and Sure Trader
On May 23, 2016 the owner of Sure Trader, Mr. Guy Gentile was officially charged with securities fraud by the US Attorney’s Office, District of New York. The official press release, from the United States Department of Justice can be found here.
On April 1, 2016 Trading Schools.Org published an article detailing the alleged securities fraud case against Guy Gentile.
The allegations of the fraud were that Guy Gentile, during the years of 2006-2009 had orchestrated several fraudulent penny stock promotions that had personally netted him several million dollars in illegal profits. The amount of personal profits to Mr. Gentile ranges in several million dollars.
In speaking with several United States based stock brokerages, two offshore stock brokerages, as well as dozens of United States based customers, the big question is how has Sure Trader been able to remain in business, and continues to accept US based customer accounts? Prior to Sure Trader, offshore stock brokerages that market directly to United States based retail customers have traditionally been a target of Federal securities regulators. The perplexing question as to how Sure Trader has remained unhampered with by US regulators, appears to no longer be a mystery. We now have the full story.
The Sure Trader “mouse trap”
Apparently, from July 16, 2012 through about July 2015, Sure Trader has essentially been used as an FBI “mouse trap”. What exactly is a “mouse trap?” The FBI has been recording everything that has been happening at Sure Trader. Guy Gentile essentially allowed the entire brokerage business to be “wired up”, and it was being used as a launch pad to execute various fraudulent securities schemes, and more importantly to trap individuals in the act of committing these frauds.
In many ways, the “mouse trap” of Sure Trader very much resembles a fake fencing operation. Where a local police department sets up a fake office location and then accepts all manner of stolen goods. They record everything. And then at some point, the choicest and most egregious criminals are indicted and jailed. Sure Trader appears to have operated as a sort of high-tech fencing operation where FBI agents have had open access to everything happening inside of Sure Trader. All of this was happening, right under the noses of the Bahamian Securities Authorities…and they had absolutely no idea.
Why would Guy Gentile allow this to happen? On July 13, 2012, Guy Gentile was originally arrested by FBI agents and jailed in Newark, New Jersey. Immediately after being arrested, Guy attempted to cut a deal with FBI agents. The FBI agreed to listen. The indictment was then resealed and temporarily shelved. Guy was allowed to leave the Newark jail. The premise of the deal was that the FBI would receive full cooperation on the pending securities fraud case, against the co-conspirators.
In addition, Guy would give the FBI, the United States Department of Justice, and the SEC full and open access to Sure Trader and that Guy would assist and curate new securities cases against various individuals and companies. All of this was in the vague promise that he could possibly “walk” from his own criminal prosecution.
Assisting the Government
Imagine for a moment, for the past several years, you have been executing various penny stock frauds and have profited millions of dollars. Executing these highly sophisticated, penny stock frauds. The government has been snooping around, subpoenaing documents, asking questions, expending resources, and conducting an investigation. The government has expended a great deal of resources, time and energy into building a case against you. Its reasonable to assume that they will “want their pound of flesh.” I find it extremely hard to swallow that Guy didn’t know that a criminal case was imminent.
In fact, Guy was very aware that the statute of limitation for securities fraud was five years. From the day he was arrested, it appears that he went into self preservation mode. The plan was to provide the government with an unlimited buffet of securities fraud and hope for one of two possible outcomes:
Outcome A: provide the government with enough cases against other individuals and companies, and hope that it would be enough to get his own case dropped.
Outcome B: cooperate with the government and hope to “run out the clock” on the 5 year statute of limitations.
And so, from about July 2012 through about July 2015, Guy went absolutely bonkers trying to build cases for the government. And by all accounts, it appears that he was one hell of a good government informant! Lets review some of his work.
Various Pump and Dump Frauds
Guy’s co-conspirators were Adam Gottgetter, Samuel DelPresto, Mike Taxon, and Itamar Cohen. He provided evidence (wire taps, etc.) against all individuals. All four plead guilty to felonies.
- Worked with the government to investigate twenty-five potential targets
- Provided a photograph and finger prints of a “highly dangerous penny stock promoter”
- Helped shutter several fraudulent broker dealers
- Helped uncover and foil several penny stock frauds, before they were able to be executed
- Cooperated with the SEC, which lead to $12 million dollars of penalties and disgorgement
- Provided evidence of a $1 million insider trading scheme involving a former J.P. Morgan analyst, which resulted in criminal prosecution
- Provided consultation and training to FBI agents
- Helped secure a conviction in a $1.9 million dollar stock spoofing scheme
Over the three year period that Guy worked as an informant, it appears that he did a tremendous amount of good. Surely, he thought that with so much cooperation, the US Attorney would drop his original, penny stock fraud case. However, the US Attorney decided to prosecute anyway. The original case, which was sealed on July 16, 2013 was unsealed and the US Attorney has decided to move forward and prosecute.
Statute of Limitations
What about the statute of limitations? It appears that Guy’s plan was to cooperate with the government and hopefully “run out the clock” on the five year statute of limitations. However, it appears that his strategy didn’t work as planned. Apparently, Guy signed a waiver that allowed the Statute of Limitations to be extended and delayed, while he was working for the US Attorney as an informant.
On July 14, 2016, the attorneys representing Guy filed a motion to dismiss the original case, on the grounds that the original statute of limitations had now expired. It should be interesting to see how the judge rules….
The following are the court documents, in their entirety. Its a long read. But worth it.
My own personal opinion
The court documents of this case are quite large. If you spent any amount of time reading the documents, it probably took you at least an hour. In my opinion, this is an extremely interesting read. Obviously, Guy Gentile feels like he has gotten a really bad deal from the US Attorney. I am sure that most folks that read the Motion To Dismiss are probably feeling sympathetic to his plight. I certainly do. He cooperated for 3 long years. During those 3 long years, I can only imagine the stress and anguish that he must of experienced.
Basically, he has been like a fish on a hook. Constantly trying to escape. But his captors tortuously offered him a sliver of hope. Allowed him to repetitively swim back down into the muck and grime. Over and over he went back and pulled out conviction upon conviction from a vast pool of fraud and deceit. Sure, he profited millions of dollars for his own fraud, but was it really worth it? I bet if you asked Guy Gentile if the crime was worth the payday, he would be the first to say, “HELL NO”. It cost him a marriage, a failed restaurant, had his name and reputation dragged through this blog, Sure Trader has taken a black eye, he has incurred massive legal expenses, personal anxiety that I can only imagine, and the threat of a very long prison sentence. If he walks free and his Motion To Dismiss is granted, perhaps he deserves it. In my opinion, it certainly appears so.
However, if he is convicted. Does it really make much difference? I cannot imagine that the prosecutor is going to ask for much jail time. And what judge, in light of his out-sized cooperation would give him a long sentence? It just seems like he has taken a real beating on this. How much more is warranted?
Well that’s it for today. Thanks for reading. And don’t forget to leave your comments below. Am very curious how the trading community feels about this case. So leave a comment!