Once the funds were cleared, the purported clearing firms quickly transfer it to different domestic or foreign bank accounts. As a result, it is difficult or impossible for investors to retrieve their funds.
Sotnikov and his companies are “directly linked to seven of the spoofed websites, through which investors have lost over $1.8 million,” the SEC alleged in its lawsuit.
In addition, the Commission stated, “Sotnikov’s participation is essential to the fraudulent scheme. He organized and/or controls the Defendant LLCs, each of which has been represented to investors as“clearing” or “offering” the CDs of a spoofed or fictitious financial firm and received investor funds. In fact, the Defendant LLCs are not clearing firms, and they do not offer or sell legitimate CDs or other securities. Instead, the Defendant LLCs were created by Sotnikov to serve as conduits to receive wire transfers from duped investors in furtherance of the fraudulent scheme alleged in this Complaint.”
The SEC alleged that Sotnikov and the entities he controlled violated the anti-fraud provisions of the federal securities laws. The Commission is seeking permanent injunctive relief and the return of allegedly ill-gotten gains with prejudgment interest and penalties.
SEC committed to exposing sophisticated cyber fraud schemes
In a statement, SEC Enforcement Division Co-Director Steven Peikin commented, “As alleged in our complaint, investors were swindled out of millions of dollars through a web of fake websites and concealed identities. Today’s action shows the SEC’s commitment to exposing sophisticated cyber fraud schemes that pose an ever-present risk to Main Street investors.”
