(Updates with lawyer’s comment in the fifth paragraph.)
June 14 (Bloomberg) -- A New York man pleaded guilty to his role in the Gryphon Holdings Inc. “boiler room” scheme, the last of 18 defendants to do so, the day after his trial began.
Baldwin Anderson, 57, a former salesman for Gryphon, pleaded guilty today before U.S. District Judge Jack Weinstein in Brooklyn, New York, and was taken into custody. Anderson and Gryphon misled investors into paying for phony stock tips and investment advice, defrauding them of $20 million, prosecutors charged.
“From April 2007 until April 2010 I participated in the scheme to defraud Gryphon clients,” Anderson told the judge.
Kenneth Marsh, 44, who ran Gryphon, was the last defendant before Anderson to plead guilty, on April 14. He’s scheduled to be sentenced July 12. Gryphon told victims its office was on Wall Street or even in the New York Stock Exchange when it was in a strip mall in the New York borough of Staten Island, according to Anderson’s indictment. Anderson told Weinstein he was paid $1.1 million while working at Gryphon.
“He took a long, hard look at the situation and decided this was the right thing to do,” Michael Padden, Anderson’s lawyer, said after the hearing.
Anderson, a Jamaican citizen who lived on Staten Island, pleaded guilty to one count of wire fraud and securities fraud conspiracy. Federal guidelines call for a prison sentence of up to 21 years and 10 months, Assistant U.S. Attorney Roger Burlingame said at the hearing.
Sentencing Next Month
Weinstein set sentencing for July 29.
Anderson was also charged with one count of securities fraud and 27 counts of wire fraud.
“The defendant worked in what is known as a boiler room,” Burlingame told jurors in his opening statement yesterday. “The evidence is going to show that the defendant lied about what Gryphon was and who worked there.”
Gryphon charged clients as little as $99 and as much as $250,000 for access to its investment recommendations, according a related lawsuit by the U.S. Securities and Exchange Commission. The company falsely claimed to have a trading desk, a $1.4 billion hedge fund and an endorsement from George Soros, the billionaire hedge-fund manager, the government said.
Before joining Gryphon, Anderson sold beds made by Craftmatic Industries Inc., he told Weinstein today.
“You gotta do those trades, that’s how you’re gonna pay your balance and put money in your pocket,” Anderson said in pitching a $25,000 Gryphon advisory plan to a client who already owed Gryphon for previous services, according to the SEC complaint.
The criminal case is U.S. v. Marsh, 10-cr-00480, and the SEC case is SEC v. Gryphon Holdings Inc., 10-cv-01742, U.S. District Court, Eastern District of New York (Brooklyn).
--Editors: Mary Romano, Charles Carter
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