LOS ANGELES
A former Malibu resident who defrauded several individuals out of more than $3 million with bogus claims he had access to stock shares of Alibaba
This was done before its initial public offering.
Frank Harold Rosenthal pleaded guilty to two counts of wire fraud, the Justice Department announced Monday.
Rosenthal, 48, currently residing in New York City, pleaded guilty Friday before U.S. District Judge Fernando L. Aenlle-Rocha.
Rosenthal admitted making false claims of having inside connections at Goldman Sachs that would give him special access to purchase discounted shares of Alibaba, a Chinese e-commerce company, before its initial public offering.
Rosenthal carried out his scheme through a middleman, David Kunkle, by making fraudulent representations and pressuring Kunkle to solicit funds from his relatives and acquaintances for the purportedly lucrative investment opportunity.
To lend legitimacy to his fraudulent scheme, Rosenthal negotiated and drafted loan agreements and promissory notes with the victims that promised the victims significant returns on their loans and investments.
According to officials, instead of using victims’ funds to purchase shares of Alibaba, Rosenthal used the money to support his lavish lifestyle, which included the $16,000 monthly rent of a Malibu home
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Judge Aenlle-Rocha scheduled a sentencing hearing on Oct. 13, when Rosenthal faces up to 40 years in federal prison and restitution.
IRS Criminal Investigation investigated this matter.
Trial Attorney Sara Henderson of the U.S. Department of Justice’s Tax Division and Assistant United States Attorneys Steven M. Arkow and Mark Aveis of the Major Frauds Section are prosecuting this case.