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U.S. Regulator Charges Russian National With Defrauding Millions From American Investors

Many of the victims were older investors seeking to earn extra income with their retirement savings, the SEC said. (illustrative photo)

WASHINGTON -- The U.S. stock market watchdog has charged a Russian national with scamming American investors out of at least $26 million over the past five years by allegedly offering fake, high-yielding deposits.

The Securities and Exchange Commission (SEC) said in a March 13 complaint that Denis Sotnikov, 36, purchased Internet ads that directed people searching for certificates of deposit to websites spoofing legitimate financial firms.

The fake websites claimed the financial firms were members of the New York Stock Exchange or other legitimate organizations and were offering above-market deposits that were federally insured, the complaint said.

“When investors called the phone number 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,” the SEC said in its civil complaint.

When the investors sent the money to the fake financial firm accounts under his control, Sotnikov either wired it to other accounts in the United States, to his overseas accounts, or used it to pay his or his wife’s expenses, the complaint said.

The SEC’s 43-page complaint lists many examples of the alleged fraud committed by Sotnikov, including the purchase of luxury jewelry and clothing just two days after an elderly couple wired $383,000 to one of the fake financial firm accounts.

The complaint said Sotnikov, who lives in Florida, began his scheme in November 2014 and his websites mimicked at least 24 real financial firms. Many of the victims were older investors seeking to earn extra income with their retirement savings, the SEC said.

Florida is a hotbed of financial fraud targeting the elderly due to the number of retirees that settle in the southern state.

The SEC investigation into Sotnikov is ongoing and is being assisted by the FBI.

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    Todd Prince

    Todd Prince is a senior correspondent for RFE/RL based in Washington, D.C. He lived in Russia from 1999 to 2016, working as a reporter for Bloomberg News and an investment adviser for Merrill Lynch. He has traveled extensively around Russia, Ukraine, and Central Asia.