FBI Arrests High Profile Fraud Running Investment Scam
A 27-year old Newcastle resident was arrested on the latter part of this month by five agents of Federal Bureau of Investigation. He has been charged with the fraud of $3 million from 25 investors from mid of 2016 to May 2018.
The investigators said that he had defrauded 25 persons promising of higher returns by investing in an IPO.
How he did it?
Keenan Alexander Gracey with an accent of British aristocrat had given the impression on his targets that he was a big investor and belonged to an affluent family.
He drove in expensive luxury cars like Bentleys, Ferraris, and Lamborghinis. He invited them to parties in multimillion-dollar mansions, one in the tony Clyde Hill community overlooking Lake Washington and another, in Beverly Hills.
He even claimed his great-grandfather had co-founded General Dynamics and Lloyd’s of London, and owing to the connections he had; he had been able to access some of the most profitable deals in the corporate.
The deal which he sold to many was the merger of three technology-based companies into a new firm, and he had personal access to the pre-IPO discount. He claimed to invest in that IPO; money can be multiplied into many times in a short period.
He had everything at his hands what was needed to make people believe on his terms. But, one of his potential investor’s doubts had put him in jeopardy which later arrested him.
After the investigation, it was clear that all means Gracey used to lure the investors were false. Gracey was a Canadian citizen not British. His luxurious life was all made up, and the luxury cars were leased. His mansions were taken on rent. One of the mansions he rented has a rent of $7500 a day. The pre IPO stock never belonged to him. And the raised $3 million has been spent in sustaining this luxurious life.
All these information were shared by the U.S. Attorney’s office in Seattle. Gracey will be facing federal charges here in Seattle.
Seth Wilkinson, the Assistant U.S. Attorney, reminded investors that in recent times, the cases of white-collar fraud had increased. The modus operandi of the fraud was almost the same in every case; a large show of wealth by mansions and cars then taking away the money after winning their faith. This case should be a reminder to every investor he said.
The modus operandi followed by Gracey was not new. Yet, people believed him. He had been operating this from 2016 till May this year when one of his victims came to the Securities and Exchange Commission (SEC). Then the SEC and U.S. Department of Justice had started an investigation on him. He even claimed to some investors that he had studied from the London School of Economics and Oxford University. He had spent thousands of dollars only to add weight to his tall claims.
But as per the SEC officials, the claim of three companies merging into one was true, and that was yet to be investigated whether he had any insider information about the merger.
He assured the investors to get them a share in $1 each which would jump to $60 after the IPO.
But, it is yet to be cleared how he targeted the victims.
His victims had nothing in common so that the chances of him being exposed were minimized. He even promised to pay 10 percent of the profit if any of his victims bring a number of investors. But, one of his victims started doubting on him as the promised date of IPO went by, and no declaration was made officially.
The investor approached the SEC and this way he got arrested.
With an intention to make fast money, people have been searching for many ways. This kind of frauds target people who want quick money. After this whole case was explained by the FBI last day, we should expect the investors to be more cautious while investing.