U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23773 / March 9, 2017
Securities and Exchange Commission v. VIPWallSt Inc., Michael Todd Osborn, Shenae Catherine Osborn, and Virgil Gene Williams, Civil Action No. 1:17-cv-0176 (S.D.N.Y., filed March 9, 2017)
SEC Charges New York Company and Three Individuals in Fraudulent, Convertible Debt Scheme
The Securities and Exchange Commission (Commission) filed a civil injunctive action on March 9, 2017, in the United States District Court for the Southern District of New York relating to a fraudulent scheme by VIPWallSt, Inc. and three individuals to sell investments in convertible debt. The Commission charged VIPWallSt, Inc. (VIP), a Delaware corporation doing business in New York, New York, convicted felon Michael Todd Osborn, his wife Shenae Catherine Osborn, both former residents of New York, and Virgil Gene Williams of San Diego, California with conducting a fraudulent scheme that misappropriated more than $400,000 from investors in several states.
According to the Commission's complaint, from approximately January to July 2015, VIP raised more than $400,000 from investors by offering investment contracts, with the proceeds to be used to purchase aged, convertible debt or promissory notes from public companies, then converted into securities, and sold for quick profits in the range of 100% to 130%. But Defendants obtained few notes, failed to convert notes to securities, and generated no profits. Instead, the Defendants simply misappropriated most of the money for their own purposes and investors lost everything they invested. Michael Osborn owned and controlled VIP. Along with Williams, Michael Osborn used a VIP-owned website called "AgedDebt.net" to solicit investors and tout their scheme. To hide his criminal past from prospective investors, Michael Osborn used an alias in his communications with prospective investors, and used his wife, Shenae Osborn, to sign corporate documents and investment contracts with investors. During the scheme, VIP reported hundreds of thousands of dollars of fictitious investments gains to its investors. In fact, VIP never sold the securities it claimed and generated no investment gains. The Osborns and Williams simply took the money to pay personal expenses, including extended stays at a New York hotel where the Osborns resided, and to pay a legal judgment owed by Michael Osborn.
The complaint alleges that, based on this conduct, VIP, Michael Osborn, Shenae Osborn and Williams violated the antifraud provisions of Section 17(a) of the Securities Act of 1933 (Securities Act), and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. The Commission further alleges, in the alternative, that Michael Osborn, Shenae Osborn and Williams aided and abetted VIP's violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5. The Commission's complaint seeks permanent injunctions, disgorgement plus prejudgment interest, civil penalties and other relief against all of the defendants. No trial date has been set.