The Securities and Exchange Commission (SEC) has filed charges against three Nigerian nationals in connection with an elaborate digital fraud scheme that allegedly bilked investors out of more than $2.9 million through the impersonation of legitimate U.S. financial professionals.

SEC Charges Three in $2.9 Million Financial Advisor Impersonation Scheme

The SEC's enforcement action targets Chibuzo Augustine Onyeachonam, Stanley Chidubem Asiegbu, and Chukwuebuka Martin Nweke-Eze for orchestrating a sophisticated online deception that spanned multiple years and victimized at least 28 investors.

According to the SEC's complaint filed in New Jersey federal court, the defendants created an intricate web of deception by establishing websites that mimicked those of approximately two dozen genuine securities brokers and investment adviser representatives from prominent U.S. financial firms.

The SEC today charged three individuals with impersonating financial professionals in a fraud scheme that targeted retail investors. https://t.co/MgEKO6kzOK pic.twitter.com/j6BTxHJQOw

— U.S. Securities and Exchange Commission (@SECGov) December 11, 2024

“Today’s charges highlight how fraudsters can manipulate online information and use technology to gain trust with investors,” said Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement. “We caution the investing public to be on heightened alert when investing with someone who is soliciting investments through social media, even if that person appears to be a financial industry professional.”

Also this week, the SEC reported on a $15 million settlement with Morgan Stanley Smith Barney (MSSB) over supervisory failures. The regulator alleged that these lapses allowed financial advisors to conduct unauthorized transfers, leading to the theft of millions from client accounts.

We charged Morgan Stanley Smith Barney for policy deficiencies that resulted in failure to prevent and detect its financial advisers’ theft of investor funds. https://t.co/0BZfsmCt9J pic.twitter.com/52cBxsHSXH

— U.S. Securities and Exchange Commission (@SECGov) December 11, 2024

How the Scheme Worked

The scheme's sophistication was evident in its multi-layered approach. The defendants allegedly planted fake testimonials across social media platforms and investment discussion groups, creating an illusion of legitimacy and success. They promised investors monthly returns of up to 25% and developed fictitious online investment platforms that displayed artificial portfolio growth to maintain the deception.

In a particularly cunning twist, the defendants employed voice-modifying software during investor communications, primarily because many of the professionals they impersonated were women. This technical sophistication helped maintain the facade while extracting millions from unsuspecting victims.

Impersonators go to great lengths to pose as investment professionals and to conceal their identities. Learn about steps you can take to protect yourself: https://t.co/W2jejaNRWK pic.twitter.com/dduoA3Krh9

— U.S. Securities and Exchange Commission (@SECGov) December 11, 2024

The SEC's complaint charges the defendants with violations of anti-fraud provisions under multiple securities laws, including the Securities Act of 1933 and the Exchange Act of 1934. Two defendants face additional charges under the Investment Advisers Act of 1940.

The Commission is seeking permanent injunctions, disgorgement of ill-gotten gains with interest, and civil monetary penalties. Parallel criminal proceedings have been initiated by the U.S. Attorney's Office for the District of New Jersey.

Meanwhile, Finance Magnates highlighted two other notable fraud cases targeting investors. In one case, the Commodity Futures Trading Commission (CFTC) charged a Washington state pastor with orchestrating a $5.9 million cryptocurrency scheme. The pastor allegedly exploited his position of trust to defraud over 1,500 Spanish-speaking congregants, promising guaranteed returns through an automated trading platform.

In another case, a federal court ordered five individuals linked to Icomtech to pay over $5 million in penalties for running a digital asset fraud scheme. Operating between August 2018 and December 2019, the scheme targeted nearly 200 investors worldwide, falsely promising daily returns of up to 2.8% through Bitcoin and other cryptocurrencies.