The owner and four employees of a Staten Island company that falsely claimed to be a top Wall Street trading firm were busted today on federal fraud charges for allegedly swindling customers out of $17.5 million, authorities said.
The company, Gryphon Holdings Inc., allegedly used high-pressure sales tactics to sell its clients – many of who were elderly retirees — increasingly expensive versions of services that included investment recommendations and money management, all while touting the firm’s purportedly impressive credentials.
Gryphon bragged that its two top traders and operators – Michael Warren and Kenneth Maseka – had graduated colleges including Harvard, Oxford, Columbia and the Wharton School of Business, as well as having had worked at the investment firms Lehman Brothers and Goldman Sachs, according to the Brooklyn US Attorney’s Office.
But in fact, federal authorities said, not only did the men lack any of those credentials, but both Warren and Maseka were fictitious.
So were the billion-dollar hedge funds and the trading desk that Gryphon supposedly operated, according to the Brooklyn US Attorney’s Office.
Prosecutors also said that a quote on Gryphon’s website that supposedly was uttered by global financier George Soros – “the traders of Gryphon Financial are incredible . . . unstoppable” – was never said by Soros.
And authorities also said that Gryphon claimed it operated in offices on Wall Street, in London and in Sydney — when in relaity the “firm” was run from a strip-mall in Staten Island.
In addition to Gryphon’s president and owner, 43-year-old Kenneth Marsh, arrested were firm employees Baldwin Anderson, 55, Robert Budion, 28, Jeanne Lada, 44, and 34-year-old James Levier.
They were charged on charges of conspiracy to commit securities fraud and wire fraud for the alleged crimes, which date to January 2007.
The defendants are being arraigned today in Brooklyn Federal Court. They each face a maximum sentence of 20 years in prison if convicted.
A woman who answered the phone at Gryphon’s offices said, “Oh boy,” when told that the five people there had been arrested. She then took a reporter’s information, and said someone from the firm would return the request for comment.