A US federal district judge on 10 February in Fort Lauderdale, Florida, sentenced Isaac Grossman, 47, of Parkland, Florida, to 87 months in federal prison for directing a fraud scheme in which he sold stock in his South Florida-based technology company to elderly investors across the country, and then misappropriated the investors' funds for his own personal use.
From September 2014 through April 2018, Grossman raised approximately $2.4m in investor funds for his company, Dragon-Click Corp., by soliciting investments from elderly retirees across the US.
Grossman told potential investors that Dragon-Click was developing an internet application that would revolutionize internet shopping by allowing a user to upload a photograph of any item the user wanted to purchase, identify all retailers offering that item for sale, provide price comparisons for that item across retailers, and provide a link to retailers' websites where the user could purchase the item.
Grossman solicited funds by falsely telling potential investors they would double, triple, or quadruple their investments, and that Dragon-Click was on the verge of being sold to a large technology company, such as Google, Apple, or Amazon, for over $1bn.
He concealed from investors that, prior to raising funds for Dragon-Click, he had been permanently barred by the Financial Industry Regulatory Authority (FINRA) from acting as a broker-dealer or associating with any broker-dealer firm, and that he had been permanently banned from commodities trading by the US Commodity Futures Trading Commission.
Grossman falsely told investors that their investment money would be used to complete the technological development of the Dragon-Click internet application, to pay legal fees related to the patent application process, and to close the sale of the application to a large technology company.
But rather than using investors' money for any legitimate business purpose, Grossman misappropriated investors' funds for his own personal use.
Specifically, Grossman spent $1.3 million of investors' money on gambling, diamond jewellery, luxury cars, home mortgage payments, tuition payments for his children's private school education, and other personal expenditures.
For example, Grossman's unlawful expenditures included a McLaren MP4-12C, a Chevrolet Corvette, and a 4.81 carat diamond ring.
Grossman previously pled guilty to wire fraud, mail fraud, and money laundering charges. The sentence was imposed by U.S. District Judge Raag Singhal.
Juan Antonio Gonzalez, United States Attorney for the Southern District of Florida, and George L. Piro, Special Agent in Charge, FBI Miami, made the announcement.
United States Attorney Gonzalez commended the investigative efforts of the FBI's Miami Field Office and also thanked the SEC's Miami Regional Office for their assistance, as they had filed a parallel civil enforcement action against Grossman.
This case was prosecuted by Assistant US Attorney Michael B. Homer. Assistant US Attorney Nicole Grosnoff is handling asset forfeiture.
