Russian CD scammer charged

The Securities and Exchange Commission has announced charges against Denis Georgiyevich Sotnikov and entities he controlled for allegedly participating in a fraudulent scheme to lure U.S. investors into buying fictitious certificates of deposit promoted through internet advertising and “spoofed” websites that mimic the actual sites of legitimate financial institutions.

According to the SEC’s complaint, the scheme involved purchasing internet ads that targeted investors who were searching for CDs with high rates. The ads allegedly included links to phony websites that falsely claimed that the firms offering the CDs were members of FINRA and the FDIC, and that deposits were FDIC-insured. When investors called the phone numbers on the websites, an “account executive” impersonating a real registered representative directed investors to wire funds to so-called “clearing” partners. These alleged clearing partners were entities used by Sotnikov to launder and misappropriate investor funds. Since November 2014, the alleged scheme involved spoofing the websites of at least 24 actual financial firms or using at least 8 fictitious entities, resulting in over $26 million in known investor losses—with many of those losses from older investors who used their retirement savings.