(Adds background of case in seventh paragraph.)
Sept. 15 (Bloomberg) -- Baldwin Anderson was sentenced to two years in prison for taking part in a “boiler-room” investment-fraud scheme on New York’s Staten Island.
Anderson, 57, a former salesman for Gryphon Holdings Inc., was sentenced today by U.S. District Judge Jack Weinstein in Brooklyn, New York. He’s been in custody since June 14, when he admitted to participating in the crime during the second day of his trial. He was the last of 18 defendants in the Gryphon case to plead guilty and the only one to go to trial.
Gryphon misled investors into paying for phony stock tips and investment advice, defrauding them of $20 million, prosecutors charged. Gryphon told victims its office was on Wall Street or even in the New York Stock Exchange when it was in a strip mall on Staten Island, according to prosecutors in the office of U.S. Attorney Loretta Lynch.
“I lost sight of the truth, I lost sight of what was good and I lost sight of the laws that govern this great country,” Anderson told Weinstein at a Sept. 13 hearing.
Anderson’s lawyer, Michael Padden, declined to comment after the sentencing.
Kenneth Marsh, 44, who ran Gryphon, was the last defendant before Anderson to plead guilty, on April 14. He hasn’t received his prison sentence yet.
Anderson, a Jamaican citizen who lived on Staten Island, pleaded guilty to one count of wire fraud and securities fraud conspiracy. Nonbinding federal guidelines called for a prison sentence as long as 22 years. Anderson had also been charged with one count of securities fraud and 27 counts of wire fraud.
No Soros Endorsement
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.
“The defendant worked in what is known as a boiler room,” Assistant U.S. Attorney Roger Burlingame told jurors in his opening statement at the trial.
In pleading guilty, Anderson told Weinstein he was paid $1.1 million while working at Gryphon. Before joining Gryphon, Anderson sold beds made by Craftmatic Industries Inc., he told Weinstein when he pleaded guilty.
“He got dazzled by what he saw Gryphon as,” Padden told Weinstein on Sept. 13. “He believed that Gryphon put out financial advice that made people money.”
Burlingame told Weinstein that after one victim sent in $100,000 he was told would be part of a special investment, Anderson received $50,000 of that in his next pay check.
“This is not being dazzled by anybody,” Burlingame said. “This is stealing.”
Anderson was Gryphon’s first hire, the prosecutor said.
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, Stephen Farr
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