A Swedish national based in Thailand orchestrated a “massive global online offering fraud” affecting thousands of investors from the United States, Puerto Rico and at least 45 other countries, according to the Securities and Exchange Commission.
Roger Nils-Jonas Karlsson used an entity he created, Eastern Metal Securities, to target investors, including hundreds of deaf and hard-of-hearing people who used the false offering to invest for retirement, according to the SEC complaint, Richard Best, the director of the SEC’s New York Regional Office, said the scheme endangered the “hard-earned savings” of thousands of investors.
“We are committed to fighting securities fraud that targets our country’s most vulnerable communities,” he said.
Starting in late 2012, Karlsson created a website for EMS, using several aliases to register it from his base in Thailand. According to the website, EMS consisted of “a group of highly educated and Award Winning Economisers [sic] and Think Tankers from South Africa and Switzerland who have created an unprecedented reputation within many areas of global economy and have represented Nobel Prize winner [sic] within the Economic field the last 7 years.”
The site featured an offering called the “Pre Funded Reversed Pension Plan;” supposedbly run by a “Mr. X,” who was allegedly an unnamed high-ranking official in the U.S. Federal Reserve, according to the complaint. Through the site, Karlsson claimed that the returned payout would be based on the value of gold and allegedly claimed that investors had no risk of loss. Karlsson continued to offering from 2012 throughout June 2019, with investors able to purchase shares via Bitcoin or by sending digital assets to other accounts.
Of the more than 2,200 investors throughout the globe, at least 893 U.S. clients invested in the scheme. Additionally, 847 of the global investors belonged to a group named the “Deaf Group,” including 367 such investors from the United States. The Deaf Group pursued retirement opportunities for members and was led by five U.S.-based group leaders who invested group members’ funds. In total, the Deaf Group sent more than $2 million to EMS via BitCoin and other digital assets since 2015.
But there was no Mr. X and the entire offering was fictitious, according to the SEC complaint. The commission stated that the EMS website claimed there was no risk because the offering was already funded through a “BG Bank Guaranteed Note,” with no evidence that such a thing ever existed. According to the complaint, investors were never repaid for their investments, including the initial ones. Throughout this period, the SEC stated Karlsson misappropriated at least $1.5 million in investor funds for his own use, including real estate investments in Thailand.
The SEC is seeking permanent injunctions on Karlsson, as well as disgorgement with prejudgment interest and civil penalties. Last November, the U.S. Department of Justice extradited Karlsson to the United States, charging him with securities fraud, wire fraud and money laundering.