U.S. Securities and Exchange Commission officials have asked a New Jersey federal judge for a restraining order to stop two men from offering worthless digital tokens while facing multiple federal actions over a $22.8 million securities fraud.
In their motion for an injunction Wednesday, SEC lawyers said that since the FBI seized Ronald Shane Flynn’s U.S. bank account in May 2020, he and his accomplice, Richard Marchitto, have “harvested” an additional $8.5 million from investors through Vuuzle Media Corp. — “a sham and a front for a Philippines-based boiler room controlled by Flynn for the sole purpose of cheating investors out of what now totals $22.8 million and rising.”
Undeterred by Flynn’s April indictment on 15 counts of wire fraud, the two men have simply moved their accounts to new banks and shifted their operations overseas and into digital assets, SEC lawyers said Wednesday.
As recently as August 25, Flynn’s son called a potential investor and made false statements about Vuuzle’s digital VUCO coin, according to the motion. And in July, the elder Flynn held a virtual shareholder meeting and claimed that “he had two billion VUCO tokens currently ‘worth $5.50,’ that would soon be ‘worth $10’ each,” the motion says, even though “its current value on Etherscan is $0.”
In the July shareholder meeting, Flynn shrugged off the “negativity” directed at him by the SEC by saying: “Well, if I got to be the bad guy to become a billionaire, that’s exactly what I’m going to do. I’ll be the bad guy all the way to the bank,” according to a transcript filed in court.
SEC officials filed their complaint in January alleging that Flynn and his company, Vuuzle Media, misappropriated $12 million of the $14 million they raised between September 2016 and May 2020 from the sales of Vuuzle common stock and warrants to U.S. investors. According to the SEC, Flynn and his employees told potential investors that the company provided livestreaming and entertainment services. Meanwhile, Flynn operated seven companies under the business name ‘Vuuzle,’ and invested only enough in its products to maintain them as “props” for the purpose of fooling investors.
Marchitto, a retired dentist living in New Jersey, aided and abetted the scheme by maintaining the company’s New York address and overseeing four U.S. bank accounts that received the majority of investor funds, according to the SEC. He then forwarded the funds to Flynn, the “founder and architect” of the scam, who controls bank accounts in the UAE, Singapore and the Philippines, the agency said. Flynn’s current whereabouts is unknown, but his last known address was in Dubai.
Flynn designed the scheme to defraud investors, and both men knew that Vuuzle would never earn money as a legitimate company, the SEC claimed Wednesday. The two have now raised $22.8 million through what they claimed were “private offerings,” though no Vuuzle security offering has ever been registered with the SEC.
In addition to prohibiting the men from opening or controlling bank accounts containing investor funds, SEC lawyers also asked the court Wednesday for a repatriation order to protect the funds currently held overseas.
Scrolling banners on Flynn’s website proclaim him to be a “jack of all trades,” the “epitome of success from humble beginnings” and a “major player in the field of business.” His bio says he was born in Los Angeles and has worked as an entertainer, actor, comedian and DJ “across the globe.” He also claims to own entertainment companies in Romania, Ireland, Italy and the U.K.
The SEC is represented by in-house attorneys Devon Staren, Gregory Miller and Daniel J. Maher. Vuuzle Media is represented by Melissa Ann Alcantara of Dickinson Wright PLLC. Marchitto is represented by Jay V. Surgent of Weiner Law Group LLP.
Counsel for Flynn could not be determined.
The case is U.S. Securities and Exchange Commission v. Vuuzle Media Corp. et al., case number 2:21-cv-01226, in the U.S. District Court for the District of New Jersey.
–Additional reporting by Rachel O’Brien. Editing by Rich Mills.
Leave a Reply