by Brian Mahany
Everyone wants to be in on the ground floor of a hot new technology. “If only I had purchased Apple stock or Google when they were first offered” has been muttered around office water coolers and local athletic clubs millions of times. We think that by being in at the ground floor of something big we can make millions. We can, if the company is legitimate and the technology or product truly revolutionary. The 100+ investors from across the United States that invested in Great American Technologies (GAT) were not so lucky. The Securities and Exchange Commission calls the investment a scam.
GAT was the brainchild of Vincent Setteducate (a/k/a Vincent Sette). According to a complaint filed in a Manhattan federal court, Sette defrauded over 100 investors. In his offering materials, he claimed that GAT had developed proprietary software called “Mail Call” that allowed users to hear readouts of emails and web pages over the telephone. Pretty impressive and apparently he did have a working prototype.
The fraud comes from some of the claims he made to potential investors. False claims made to investors in a new company are called offering frauds. They are one of many types of securities fraud.
Sette told investors that the company would earn $4.3 million in revenues during its first year based on 100,000 customers. The government says the product it could handle maybe 48 users at most.
Sette also claimed that the company had signed contracts with the Colorado Bar Association, National Federation of the Blind, Value Inn Hotels and many others. All false says Uncle Sam.
GAT’s website and offering materials even claimed its CFO was a prominent former official with the New Jersey Institute of Technology. Also false says the government.
Where did the investor’s money go? Did it go to develop the Mail Call program? The SEC says that much of the money went into Sette’s pocket. They claim he took far more than he agreed to take in offering documents. They also claimed he failed to disclose that he had been previously convicted of wire fraud and had already been enjoined from violating securities fraud laws.
The SEC case ended with a judgment against GAT in November of this year. It is unknown whether investors will ever be made whole. GAT continues to maintain its innocence and says it has a viable product.
While we can applaud the SEC for pursuing fraud, fraudsters who have already been convicted of criminal fraud should not be given a second chance. The SEC’s recourse is civil. And the forfeiture and fines ordered as a result of their action are certainly welcome. Those fines, unfortunately, are not a strong enough incentive to change the behavior of hard core fraudsters.
[NOTE: The criminal charges against Sette were dismissed. Please see the comments below this blog post for more details. It was never our intent to say that Sette’s product, MailCall, was a scam. The SEC says it was. And obviously from the comment below, others disagree. Because Sette defaulted early on in the case and the case was ultimately settled, there are not many facts in the court records. We accept the commenter’s remarks as sincere and take no position on the MailCall product.]
Mahany & Ertl is an asset recovery and fraud recovery law firm concentrating in a wide array of fraud, tax and professional malpractice issues. We help individuals and businesses who are victims of fraud including mortgage frauds and securities fraud. We also help collect court judgments where the assets are hidden or protected by phony trusts or corporations.
Call Brian Mahany at (414) 704-6731 for more information or visit our website at https://www.mahanyertl.com. Comments and questions are welcome