Federal Judge Jose E. Martinez in the Southern District of Florida has appointed Melanie E. Damian, a senior partner at Damian & Valori, as receiver in a fraud case against Miami business owners Timothy Atkinson and Jay Passerino.
The men are accused of using offshore companies All in Publishing LLC and Gasher Inc. to run an illegal trading operation from Brickell, defrauding investors of $30 million.
The Commodity Futures Trading Commission, an independent federal agency that regulates commodities and trading activities, has alleged that Atkinson and Passerino conducted at least 29 fraudulent marketing campaigns between October 2013 and November 2016.
As the allegations in the lawsuit are pending, the CFTC moved for the appointment of a receiver and for a statutory restraining order, which would freeze assets and allow records to be inspected in the meantime.
Damian, who’s represented companies and individuals in business litigation since 1996 and has served in a host of federal equity receiverships, will wade into the fray to marshal the assets at stake.
What’s “interesting” about this case, Damian said, is that although the companies are offshore, they were operated locally, off Brickell Avenue.
“We are still in the process of understanding how this particular enterprise worked, where the assets are and how to secure them,” Damian said.
According to the CFTC’s Sept. 27 complaint, Atkinson and Passerino used fraudulent marketing websites and sales videos to encourage “tens of millions” of prospective customers to create and fund binary options trading accounts — an all-or-nothing style of investment, most commonly made in stocks or bonds.
“It’s a way to speculate or gamble on securities,” Damian said. “You would essentially place a bet, yes or no, that a certain security would go up within a time frame.”
That time frame could be as short as five minutes or as long as a year, Damian explained.
“You could bet that in the next five minutes, Apple is going to increase its share price,” Damain said. “If it does, you win a certain amount or obtain a return of your investment, or you would lose that investment.”
According to the complaint, Atkinson and Passerino’s alleged marketing scheme harnessed “numerous false and misleading statements” about automated trading software developed by their companies, which “promised to generate massive profits with zero risk of loss.”
Passerino’s lawyer, Alex Spiro of Quinn Emanuel Urquhart & Sullivan’s New York office, said in a statement to the Daily Business Review, ”Jay is nothing more than an accomplished marketing consultant across all industries. He should not be a defendant in this lawsuit, and we will fight it.”
The pair face allegations that they employed “actors depicted as true users or creators” of the binary options trading software, “falsely claiming they had earned significant profits.”
The defendants also allegedly created “fictitious trading performance and account statements showing consistent profits with no losses.”
“In response to this marketing, at least 51,000 customers deposited at least $12,750,000 to initially fund their accounts,” the complaint said.
Read the court order granting CFTC’s motion to appoint a receiver:
The CFTC is represented by Allison V. Passman, Rosemary Hollinger, Scott R. Williamson and Susan Gradman, none of whom returned requests for comment.
A hearing is set for Oct. 12, when the court will determine whether to grant a preliminary injunction in the case.
The next step, according to Damian, will be to unearth all potential victims of the alleged fraud.
Damian is listed as one of the Top 50 Women Lawyers in the state by Florida Super Lawyers magazine, chairs the Florida Bar’s business law section, and is chairwoman-elect of the International Women’s Forum Florida chapter.