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Law360 (April 17, 2020, 6:49 PM EDT ) The Texas State Securities Board took aim on Friday at a purported foreign currency trader who it says is duping investors into pouring their funds into forex and binary options by telling them they can "profit off the coronavirus" as the stock market struggles.
Georgia man Kenzley Ramos, also known as Anthony David "Tony" Mckinney and Anthony Green, has been soliciting investors in Texas for investments of between $200 and $2,000, and guaranteeing weekly returns of 300%, the TSSB says.
Ramos posted ads on the financial services section of Craigslist.org for the cities of Austin, Dallas, Houston and San Antonio, offering investors a way to profit while the stock market was "crumbling," according to the enforcement action.
The state agency alleges that Ramos violated the Texas Securities Act and defrauded his investors, at least one of whom had their funds stolen outright when they wired their investment directly to Ramos' bank account and never heard from Ramos again, according to the complaint.
While the TSSB was not able to disclose the total amount of money believed to have been misappropriated by Ramos, its Enforcement Division Director Joseph Rotunda told Law360 on Friday that this is not the first time Ramos has scammed investors.
The TSSB is investigating victim complaints published on various online forums that go back to at least 2015, Rotunda said.
"Given the breadth of the complaints, there is certainly potential for widespread harm to many investors involving considerable amounts of money," he said.
In a separate enforcement action on Thursday, the TSSB alleged that a West Texas oilman was fraudulently soliciting investments in oil and gas wells in a scheme that Rotunda says "began in the wake of coronavirus."
Kenneth Wayne Wooldridge, who owns and operates Texas Shallow Oil & Gas LLC, promised investors a "quick return" on their investments that could "set [the investor] up for retirement," without disclosing the risks as the oil market has taken a steep downturn amid the pandemic, the TSSB says.
Wooldridge advertised on LinkedIn and online marketplace Dealstream in March and April, fraudulently promising investors that they would turn a profit even if oil prices dip to $20 per barrel, according to the action.
He is an unregistered dealer offering unregistered securities without warning investors that changes in the price or demand level for oil can affect the profitability of those investments in violation of the Texas Securities Act, the TSSB said.
As of Friday afternoon, oil benchmark West Texas Intermediate put the price of crude oil at $17.64 per barrel — an 18-year low.
Rotunda said that Wooldridge was preying on his investors' fear as COVID-19 threw their future financial stability into question.
"[As] the economy and the regulated markets sharply declined, Wooldridge attempted to capitalize on the changes," said Rotunda. "He was playing to the public's concern about their financial future during times of economic uncertainty."
"His pitch also has the hallmarks of an old-fashioned scheme dressed up in contemporary clothing: Buy low, sell high and ignore all the risks and red flags associated with the scheme," Rotunda added.
The TSSB also alleges that Wooldridge failed to disclose to investors that he and Texas Shallow have a history of legal entanglements, including a 2019 breach of contract suit accusing them of not paying previous investors.
Investors in that suit, which is pending in a Texas county court, seek $20,500 in damages, according to TSSB.
Wooldridge also owes the Texas Railroad Commission, which regulates the state's oil industry, over $50,000 in penalties ordered in an administrative action back in 2018, the TSSB said.
In recent weeks, U.S. financial regulators have been warning the industry about the proliferation of scams and abuses as volatility rips through the markets due to the coronavirus pandemic.
The U.S. Securities and Exchange Commission, Financial Industry Regulatory Authority and Financial Crimes Enforcement Network all issued alerts last month about potential misconduct, such as Ponzi schemes, insider trading, pump-and-dump schemes and imposters.
The TSSB is represented in-house on the Ramos case by Joseph Rotunda and Jeramy Heintz, and on the Wooldridge case by Rotunda and Justin Stoll, all of the Enforcement Division.
Contact and counsel information for Ramos and Wooldridge was not immediately available Friday.
The actions are In the Matter of Kenzley Ramos AKA Anthony David "Tony" Mckinney AKA Anthony Green, Order No. ENF-20-CDO-1803, and In the Matter of Texas Shallow Oil & Gas LLC and Kenneth Wayne Wooldridge, Order No. ENF-CDO-1802, both before the Texas State Securities Board.
--Additional reporting by Al Barbarino. Editing by Alyssa Miller.
For a reprint of this article, please contact reprints@law360.com.
