Frank Harold Rosenthal, a former Malibu resident recently residing in New York City, has received a more than 15-year federal prison sentence for defrauding investors with false promises of access to discounted Alibaba IPO shares. The scheme, carried out by Rosenthal, resulted in a theft of over $3 million from unsuspecting victims according to the U.S. Attorney's Office, Central District of California news release.
Rosenthal's scheme, executed from November 2013 to April 2015, involved the manipulation of an unsuspecting intermediary, who solicited funds from relatives and acquaintances for this investment opportunity. Rosenthal's alleged connections at Goldman Sachs, he claimed, allowed him to access pre-IPO shares of Alibaba, a large Chinese e-commerce company.
This deception also included fraudulent loan agreements and promissory notes, which signaled substantial returns to investors. To keep the scam going, the victims were told that their purchased shares had restrictions that prevented immediate resale. Rather to invest in Alibaba shares, the stolen funds were used to fund Rosenthal's extravagant lifestyle, which included a $16,000 monthly rent for a Malibu residence. A Ponzi scheme tactic was also used, where some victims' funds were used to pay others in order to avoid detection.
Phony emails and claimed high-profile friendships were another part of Rosenthal's ploy, seeking to create an image of exclusivity and success. Upon revealing Rosenthal's tactics, prosecutors labeled him an "incorrigible, serial liar" in sentencing documentation. With this revelation, investor confidence was naturally shaken, leaving victims in search of justice and reassurance in an environment where trust can be exploited.
Rosenthal's ultimate sentencing to 188 months in federal prison and a restitution order totaling $1,182,500 may bring little comfort to his victims, but nevertheless highlights the warning of deception and betrayal in the financial investment world.
