Scam artist verdict: 4 years in jail, pay victims |
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February 19, 2004 – A scam artist who preyed on African-American investors in Ohio and five other states was sentenced to four years in prison Friday and ordered to pay restitution to his victims. Stanley Cox ran the bogus firm, Vital Investments, out of the basement of his Kugler Mill Road home in Kenwood. He managed to bilk investors out of $7.9 million between January 2002 and June 2003. Cox pleaded guilty in June to securities fraud, making false reports in the sale of securities, selling unregistered securities and aggravated theft. He was ordered to pay $1.5 million dollars in restitution. Cox began his scheme by convincing African Americans in the Cincinnati area to buy 12-month investment certificates, with promised returns of 30 to 400 percent. Initial investors began receiving monthly checks and many rolled them over to purchase more certificates. As word of the get-rich-quick scheme spread, more people. Ultimately investors from Kentucky, Indiana, Illinois, Florida and Texas joined the Ohio investors and approximately 140 people were taken in by the scam. Cox told investors the money was guaranteed by the estate of Beatrice and Stanley Cox. Cox gained people's trust through a scam known as affinity fraud, in which investment promoters play upon the fact that they share a common bond with investors. Investors lower their guard because they share a common ethnicity or attend the same place of worship as the investment representative, and are then taken advantage of. "This is an unfortunate example of how affinity fraud can inflict tremendous damage when people mistakenly believe someone they are doing business with has similar values and life experiences," said Acting Ohio Securities Commissioner Michael Miglets. Cox promised the money would be invested and used for charitable purposes. He also told investors their gains were tax-free and that he had a billion-dollar portfolio. In fact there was no billion-dollar portfolio and none of the money was used for tax-exempt investments or charitable contributions. Cox was not licensed to sell securities.
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