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From Securities Regulation Daily, August 5, 2013

iTrackr CEO pleads guilty to $2.5 million offshore boiler room fraud

By Anne Sherry, J.D.

John G. Rizzo, the former CEO of iTrackr Systems, Inc., pleaded guilty last week to conspiring to defraud investors of $2.5 million by using offshore boiler rooms to solicit investments in the company’s penny stock, without disclosing that up-to-80 percent of the investments were paid to the boiler room operators as commissions. The SEC’s civil complaint, filed in the district court in San Diego, seeks a permanent injunction, disgorgement, civil penalties, a penny-stock bar, and an officer-director bar (SEC v. Rizzo, August 2, 2013).

The SEC’s complaint alleges that Rizzo used a shell company in the British Virgin Islands to avoid U.S. securities registration requirements when selling iTrackr shares to investors in the United Kingdom. To make the investments appear more legitimate, however, he allegedly instructed investors to send their money to U.S. escrow companies and bank accounts. He then transferred the funds to his bank account in Belize, from which he paid the boiler room commissions, according to the SEC.

In the criminal proceeding, Rizzo is scheduled to be sentenced on October 28 in connection with his guilty plea to conspiracy to commit wire fraud.

The civil case is No. 3:13-cv-01801-MMA-BLM.

Attorneys: Sara D. Kalin for SEC.

Companies: iTrackr Systems, Inc.

MainStory: TopStory CaliforniaNews Enforcement FraudManipulation

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