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Ex-ceo From Long Island Sentenced For Scheme To Defraud Victims In Sale Of Worthless Stock

A former CEO from Long Island will spend time behind bars after admitting to his role in a scheme to defraud the elderly victims in the sale of worthless stock.

A former CEO from Long Island is heading to prison for selling worthless stock.

A former CEO from Long Island is heading to prison for selling worthless stock.

Photo Credit: Pixabay

Hauppauge resident Keith Orlean - also known as “Jack Allen” - was sentenced to 32 months in prison after pleading guilty in Manhattan federal court.

Orlean admitted to participating in a scheme targeting elderly persons to solicit purchases of stock using a series of valueless companies through a variety of lies and misrepresentations.

For several years, Orlean and his co-conspirators operated a fraudulent scheme in which a salesman named “Mike Palmer” would call elderly people, U.S. Attorney for the Southern District of New York, Geoffrey Berman said.

The callers offered the victims a “time-sensitive opportunity to buy stock in certain companies,” Berman said.

Berman said that there was no “Mike Palmer,” and the salesman was one of Orlean’s two co-conspirators, who took turns using the faux alias. 

The alleged time-sensitive investments were also fabricated by the three men, and the money went to companies they controlled.

“In one intercepted phone conversation, a co-conspirator described to Orlean his strategy for a successful investor sales pitch as: ‘You ram it down their (expletive deleted) throat,’ ” Berman said. 

“In another intercepted call," Berman added, "upon learning that a particular victim investor died, the co-conspirator remarked: ‘I knew I should have pulled the last $10,000 out of him.’ ”

According to the FBI, since April 2014, Orlean and his conspirators convinced more than 50 elderly people to purchase stock in companies based on false representations. In total, they solicited more than $2 million.

Orlean, 62, pleaded guilty to one count of conspiracy to commit securities fraud and one count of securities fraud. 

In addition to his prison term, Orlean was ordered to pay restitution of $2,080,771 and will forfeit $883,700. He will also serve three years of supervised probation following his release.

Berman said, “Keith Orlean and his co-conspirators obtained more than $2 million by taking advantage of innocent investors – many of them elderly – through blatant lies. 

 As this prosecution and today’s sentence reflect, this kind of predatory fraud will not be tolerated.”

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