SEC Files Offering Fraud Action Tied to Telecoms

Offering frauds are one of the most, if not the most, prevalent types of frauds the Commission deals with. The patterns and variations of these schemes are probably endless. Typically, however, the schemer crafts a tale that promises the investor significant profits and returns from a venture that is about to be launched. In some instances, the returns may be quite large, but often they are just good enough to induce the would-be investor to put up his or her savings, but not so large that the would-be investor is scared off. The subject matter of these schemes ranges from simple investments like obtaining tickets to Broadway plays that are sold out to new ventures and AI that, to an extent, “wow” the about to become investor. Again, whatever it is, the pitch is crafted to be good enough to draw in the would-be investor but not so good it scares him or her off.

The person behind the Commission’s latest offering fraud case clearly found the balance. Over a four-year period Defendants raised in excess of $22 million by using a privately held company as the front. SEC v. Feller, Civil Action No. 1:24-cv-0896 (S.D.N.Y. Filed April 17, 2024).

Named as defendants in this action were Paul Feller and Icaro Media Group, Inc. The firm is a private entity that began life as Sport 195, Inc. and later changed its name. Paul Feller is the Chairman and CEO of Icaro. Prior to his association with this venture he co-owned a firm called Americas of Cronus Equity, LLC.

Over a four-year period, beginning in 2017, Mr. Feller solicited investments in Icaro. Over the period he raised in excess of $22 million from at least 38 investors. The sales pitch was straight forward. He told the would-be investors that the firm’s business partners – two multinational telecoms – and Inco were about to launch, or already had launched, digital platforms and mobile phone applications featuring sports content tailored to the regional interests of clients of the two international giants.

While one of the firms did in fact launch trial projects with Icaro, each was terminated in 2016. Icaro never launched any product with the other firm. Its efforts in that regard failed for a variety of reasons which included Icaro’s failure to obtain the appropriate licenses for the content. Nevertheless, Mr. Feller continued the sales pitch, sometimes with variations such as a claim that a high profile business executive was about to become part of the deal along with a well know sportswear company. The transactions never took place. The complaint alleges violations of Securities Act Section 17(a) and Exchange Act Section 10(b). The case is in litigation. See Lit. Rel. No. 25979 (April 17, 2024).