Michael Todd Osborn, Stock Trading Scheme, Colorado 2016

A New York City man has been sentenced to 77 months in federal prison for his role in a stock trading scheme that defrauded investors out of $695,000.

Michael Todd Osborn, 46, was sentenced by U.S. District Court Judge Christine M. Arguello on December 1, 2016, after pleading guilty to wire fraud and money laundering charges.

According to the indictment, Osborn and his co-defendant, Corey Earl Engelen, devised a scheme to defraud investors between October 2009 and July 2010. Osborn held himself out to investors as an experienced trader of stocks and other securities and a veteran in the equity/swing trading business.

He sold investors units in the CU Equity Swing Fund I, LLC and the 10x Leveraged Oscillator Fund, through which he represented he would conduct short-term trading. Investors typically learned of the investment opportunity through a friend or trusted associate.

Osborn falsely represented that he had a prime trading account through which he would be able to leverage the funds invested and thereby reap greater profits than from unleveraged trading. He also falsely represented that the investors’ funds were protected from fraud, larceny, and embezzlement by a fidelity bond with Lloyds of London.

Osborn instructed investors to wire their funds to accounts held in the name of Infinite One, LLC, which he represented to be the trading accounts he would use for the trades. In fact, the accounts were not trading accounts and were never used for trading.

Once the investors had wired funds, Osborn provided them "blotters," which contained detailed records of trades he had purportedly made. The information provided to the investors was false, as Osborn had never made the trades, and certainly no profits had been realized.

Osborn used the funds for his own personal benefit, including purchasing a Mercedes-Benz, paying for family vacations, paying his attorney and a victim in an unrelated criminal case, and paying his ordinary living expenses and debts.

Osborn was also ordered to pay a fine of $100,000 and restitution of $695,000 to the investors. His co-defendant, Corey Earl Engelen, pled guilty to one count of money laundering and is scheduled to be sentenced on January 31, 2017.

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