In a significant ruling on Thursday, con artist Frank Harold Rosenthal received a 188-month prison sentence from US District Judge Fernando L. Aenlle-Rocha for defrauding investors through a scheme involving counterfeit pre-IPO shares. The sentence surpassed both the prosecution's and Rosenthal's own recommended terms. In addition to his prison term, Rosenthal is ordered to pay restitution exceeding $1.1 million.
Rosenthal admitted in June 2023 to swindling investors out of $4 million by falsely promising them pre-IPO shares of Alibaba (NYSE:BABA)'s 2014 IPO, which he claimed were obtained through a non-existent Goldman Sachs (NYSE:GS) insider known as "Martin Graham." Leveraging this deception, he lured investors with the prospect of substantial returns and a sense of exclusivity, despite having no connection to Goldman Sachs or access to Alibaba's IPO shares.
The funds acquired from this fraudulent activity were lavishly spent on personal indulgences, including leasing a Malibu property for $16,000 per month. Among the victims was a retiree who, in an effort to avoid bankruptcy, invested over $1.2 million with Rosenthal in a cannabis dispensary business. This investment, along with others made based on Rosenthal's fraudulent promises, culminated in total losses of $2.8 million for the retiree.
Rosenthal's conviction and sentencing serve as a cautionary tale to investors and highlight the severe consequences of financial deception and exploitation.
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