LI Man Pleads Guilty To Defrauding Elderly Victims: DOJ

LONG ISLAND, NY — Keith Orlean, also known as "Jack Allen," pleaded guilty on Thursday to participating in a scheme to target elderly people to solicit purchases of stock in a series of valueless companies through a variety of lies and misrepresentations, Geoffrey S. Berman, the United States attorney for the Southern District of New York, announced.

Orlean, 61, of Dix Hills, pleaded guilty to one count of conspiracy to commit securities fraud, which carries a maximum penalty of five years in prison, and one count of securities fraud, which carries a maximum penalty of 20 years imprisonment.

"As he admitted today, Keith Orlean purported to offer elderly victims time-sensitive investment opportunities," Berman said in press release. "In actuality, he was selling victims a package of false promises that yielded profit only for him and his co-defendants. Orlean now awaits sentencing for his predatory practices."

For several years, Orlean and two co-conspirators ran a fraudulent scheme in which a salesman named "Mike Palmer" would call elderly people on the phone and offer them what he claimed was a time-sensitive opportunity to buy stock in certain companies, Berman said. Palmer was a salesman alias used by Orlean's co-conspirators, who took turns using the name, Berman said.

The purported time-sensitive investment opportunity was also made up by the conspirators, as the companies in which they asked for investments were actually companies under their control, Berman said.

In one intercepted phone conversation, one co-conspirator told Orlean his strategy for a successful investor sales pitch was: "You ram it down their f------ throat," Berman said. In another intercepted call between the same co-conspirator and Orlean, upon learning that one of their victims had died, the co-conspirator remarked: "I knew I should have pulled the last $10,000 out of him," Berman said.

The most recent version of the team's phony sales pitch included false representations about an impending initial public offering, or "IPO," for their company, Digital Donations Technologies, Inc., Berman said. For example, in April 2018, one of the scammers assured a victim investor that "our company is doing great," that the company had an offer for an IPO valued around $300 million, and that Orlean was considering a private sale of the company for more than $1.5 billion, Berman said. However, the team knew that the company had little or no actual commercial value and that no such IPO or sale was taking place, Berman said.

The FBI estimates that since April 2014, the scammers convinced more than 50 elderly people to purchase stock in companies controlled by one or more of the conspirators based on false representations, Berman said. The team appears to have solicited more than $2 million in stock purchases from victims, Berman said.

Orlean is scheduled to be sentenced on Jan. 10, 2020.

Orlean's co-conspirators are yet to be convicted, Berman said.