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SEC Action Against Florida Investment Scheme For Targeting Seniors

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The Securities and Exchange Commission has frozen the assets of a South Florida-based company that defrauded more than 100 retail investors, many of them seniors, in a Penny Stock fraud scheme.

According to the SEC's complaint, the operators of the investment scheme, NIT Enterprises CEO Gary R. Smith, Jason M. Ganton, and James E. Cleary, Jr. raised $4.9 million from investors by making misrepresentations.

They told the investors that NIT was raising money to fund the company's efforts to develop its radiation protection products for medical and military applications, that could fetch significant returns.

But SEC alleges that Smith misappropriated $1.25 million of the proceeds towards personal expenses, and paid an equal amount of money raised as undisclosed commissions. The operators also made false promises about future profitability and initial public offering.

Ganton and Cleary were previously barred by the Commission from acting as brokers and offering penny stocks to investors. SEC said in a press release that they concealed their disciplinary history by using Ganton's alias when soliciting investors.

They have also been charged for acting as unregistered broker-dealers and violating previous orders of the Securities and Exchange Commission.

Responding to an emergency action filed by SEC, Judge Cecilia M. Altonaga of the U.S. District Court for the Southern District of Florida granted its request for a temporary restraining order and temporary asset freeze against the defendants.

SEC has sought relief including injunctions, civil penalties, and disgorgement.

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