Two self-proclaimed stock-picking experts who persuaded consumers on late-night infomercials to spend tens of thousands of dollars on software and other products to play the market were convicted of fraud and conspiracy in federal court Thursday.
Linda Woolf, 49, of Sandy, Utah, and David Gengler, 35, of Draper, Utah, passed themselves off as successful stock traders. In reality, Woolf lost money in the market while Gengler at best made a nominal profit, according to tax records.
They sold wares offered by a company called Teach Me to Trade. Sometimes, customers paid as much as $30,000 for the stock-picking system and software.
Although playing the market wasn’t profitable for the pair, they did make millions of dollars in commissions by traveling to hotel seminars across the country and selling Teach Me to Trade products.
Prosecutors said consumers never would have purchased those products if Woolf and Gengler h ad not portrayed themselves as successful investors.
In a monthlong trial in U.S. District Court, defense attorneys acknowledged that Woolf and Gengler occasionally misspoke or embellished in their sales pitches, but said the two were being held to an impossibly high standard, especially because the law distinguishes between fraud and “puffery” or sales talk.
“What has happened here is the government has criminalized the sale of legal products,” Woolf’s lawyer, Mark Schamel, said in a phone interview after the verdicts. “Every person in America involved in sales has to have a serious concern when they get up and go to work.”
Gengler’s lawyer, Christina Sarchio, said the verdict “has a chilling effect on salespeople everywhere” and said Gengler is reviewing all his options to get the conviction overturned.
The jury deliberated for only about three hours before convicting the two on all seven counts – one conspiracy count and three counts each of wire f raud. The government dropped eight other fraud charges midway through the trial.
Sentencing has been set for July 31. U.S. District Judge Anthony Trenga can set aside the verdicts and dismiss the case.
Schamel declined to comment on the pending motions to dismiss or on whether he might appeal.
Gengler and Woolf worked as independent contractors for Teach Me to Trade, which is a division of publicly traded Whitney Information network in Cape Coral, Fla.
It is unclear whether the convictions might result in other charges against Whitney or companies that put on similar seminars. Government agents said during trial that the investigation of Whitney is ongoing.
Assistant U.S. Attorney Derek Andreson said after the verdict that “this is an unregulated nationwide industry that targets unsuspecting members of the community. Its financial impact is devastating and it warrants continued federal prosecution.”
While Whitney has not been charged, the indictment against Woolf and Gengler said that the two relied on Whitney’s “fraudulent marketing efforts” in their scheme to defraud.
Supreme Court Allows Multibillion-Dollar Class Action Lawsuit To Proceed Against Meta
The Supreme Court is allowing a multibillion-dollar class action investors' lawsuit to proceed against Facebook parent Meta, stemming from the privacy scandal involving the Cambridge Analytica political consulting firm.
The justices heard arguments in November in Meta's bid to shut down the lawsuit. On Friday, they decided that they were wrong to take up the case in the first place.
The high court dismissed the company's appeal, leaving in place an appellate ruling allowing the case to go forward.
Investors allege that Meta did not fully disclose the risks that Facebook users' personal information would be misused by Cambridge Analytica, a firm that supported Donald Trump 's first successful Republican presidential campaign in 2016.
Inadequacy of the disclosures led to two significant price drops in the price of the company's shares in 2018, after the public learned about the extent of the privacy scandal, the investors say.
Meta spokesman Andy Stone said the company was disappointed by the court's action. "The plaintiff's claims are baseless and we will continue to defend ourselves as this case is considered by the District Court," Stone said in an emailed statement.
Meta already has paid a $5.1 billion fine and reached a $725 million privacy settlement with users.
Cambridge Analytica had ties to Trump political strategist Steve Bannon. It had paid a Facebook app developer for access to the personal information of about 87 million Facebook users. That data was then used to target U.S. voters during the 2016 campaign.
The lawsuit is one of two high court cases involving class-action lawsuits against tech companies. The justices also are wrestling with whether to shut down a class action against Nvidia.... Read More