Gryphon boss cops to running sham investment firm

Kenneth Marsh, who ran Gryphon Holdings Inc., pleaded guilty to charges that he misled investors into paying fees for phony stock tips and investment advice.

Marsh, 44, pleaded guilty today to one count of securities fraud before U.S. District Judge Jack Weinstein in Brooklyn, New York. Marsh faces a prison sentence of as long as 14 years under federal sentencing guidelines, said Assistant U.S. Attorney Roger Burlingame.

Agreeing with a statement read by Weinstein, Marsh admitted that he “put false statements into the marketplace in order to induce potential customers of Gryphon to subscribe to the $99 introductory price of Gryphon.”

Marsh is the 17th of 18 defendants, including members of Gryphon’s sales force, to plead guilty. Baldwin Anderson, a sales representative, plans to go to trial, his lawyer, Michael Padden, told the judge earlier today at a court conference.

Alan Futerfas, Marsh’s lawyer, declined to comment after the sentencing.

Marsh was charged in April 2010. He has been in jail since November, after he was accused by prosecutors of engaging in conduct similar to the actions that led his arrest and he was unable to raise the additional bail required.

Marsh was also sued by the U.S. Securities and Exchange Commission.

Gryphon charged clients as little as $99 and as much as $250,000 for access to its investment recommendations, according to the SEC’s lawsuit. Clients often lost money on trades suggested by Gryphon, the SEC said.

Gryphon’s employees lied about their credentials, falsely claiming to oversee billion-dollar hedge funds from offices on Wall Street and in London and Sydney, prosecutors said. The shop was run from a strip mall in the New York borough of Staten Island, they said.

–Bloomberg News–

Related Topics: Fraud Charge Tracker