(STL.News) – United States Attorney William M. McSwain announced that Robert McCabe, 76, of Bangor, PA, was charged by Information with multiple counts of securities fraud, mail fraud, and wire fraud in connection with an extensive fraudulent investment scheme.
According to court documents filed today, between September 2010 and July 2020, the defendant stole more than $1,000,000 from more than 50 family members and friends, including former fraternity brothers, by claiming that his company, McCabe Properties, Inc., owned close to two million shares of something he called “founders shares” of a well-known pharmaceutical company. He offered those “shares” to his victims by selling them a corresponding number of shares of McCabe Properties, Inc.
As alleged, McCabe sold this investment to his victims at a price of between $2.60 and $2.70 per share, which would have represented a significant discount over the actual share price for shares of the pharmaceutical company. In reality, however, McCabe Properties, Inc. had no assets whatsoever. The defendant spent the more than $1 million he took in from his victims, leaving them with nothing but worthless shares of McCabe Properties, Inc.
McCabe was able to deceive his victims over the span of the scheme by allegedly: (a) preparing and shipping to them shares of McCabe Properties, Inc. that purported to correspond to the number of shares of the pharmaceutical company; (b) falsely informing victim investors that their “founders shares” could only be sold once the pharmaceutical company was acquired by another company; (c) forwarding press releases, financial analysis reports, and news stories on the status of the pharmaceutical company to the victim investors; (d) falsely representing to clients that the nonexistent “founders shares” owned by McCabe Properties, Inc. had been purchased from a private venture capital firm that had ties to a known securities fraudster, making selling the “founders shares” problematic; and (e) communicating with clients by email and telephone and providing them with false reasons for an inability to sell the “founders shares.”
“As alleged, McCabe is a fraudster who promised something that he had no intention of delivering,” said U.S. Attorney McSwain. “Here, according to the Information, he exploited personal relationships with trusting members of his own family and circle of friends, repeatedly lying about the investment he sold to them. This type of financial fraud has devastating consequences for the victims and must be aggressively prosecuted and deterred at every turn.”
McCabe faces a maximum sentence of 420 years in prison, a three-year period of supervised release, a $10,000,000 fine, and a $2,100 special assessment.
The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Michael S. Lowe.
An indictment, information, or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.