David Gengler, 33, of Draper, and Linda Woolf, 48, of Sandy, face civil fraud charges filed by the Securities and Exchange Commission and criminal charges filed by the U.S. Attorney for Virginia in federal court in Alexandria. Lashaico Inc., Gengler's company, and Woolf's Hands on Capital Inc., also are named in the SEC complaint.
Victims paid as much as $40,000 for services and materials from Teach Me To Trade, a company in Murray for which Gengler and Woolf worked as independent contractors.
In three-day seminars throughout the United States and in late-night informercials, the two falsely told audiences they were highly successful stock traders, court documents state. In addition, it is alleged that Woolf recruited an unnamed co-conspirator from a nail salon and coached him to act like a highly successful stock trader.
"Woolf has never declared a securities trading profit on her federal income tax returns," according to the SEC complaint. "During the period Gengler claims to have been a successful professional trader using the option and short-term trading strategies, he declared more short-term capital losses than short-term capital gains. His tax returns have typically related no short-term gains."
Woolf and Gengler made millions of dollars not by trading but by selling Teach Me to Trade packages of classes, mentoring and computer software, the SEC complaint says. Gengler earned $2.25 million from 2003 to November 2006, while Woolf made about $4 million.
The government is seeking forfeiture of property brought from proceeds of fraudulent activities. That includes properties in Draper, Orem and Bluffdale, various credit union and bank accounts, and vehicles that include a Porsche Cayenne and a H2 Hummer, as well as a Dream Catcher House boat with jet skis.
Salt Lake City attorney Mark Pugsley, who represents Woolf in the civil case, said that the SEC complaint "contains a novel theory of securities fraud." The Securities Exchange Act requires that fraud must be "in connection with" the purchase or sale of the securities, he said.
"Linda Woolf is an eductor, she does not sell securities, and she did not know about or stand to benefit from any securities trading by her former students."
An attorney for Gengler did not return calls seeking comment.
Teach Me to Trade is owned by Whitney Information Network Inc., a publicly traded company based in Cape Coral, Fla. Whitney was not charged, though the SEC said some of its materials made pitches similar to those of Woolf and Gengler. A spokeswoman for Whitney told The Associated Press the company had no comment.
In free seminars and the infomercials, the pair promised that people who follow the Teach Me to Trade stock trading system could make extraordinary returns. They told participants how both of them went into debt to learn the trading system and then made huge returns. The pair gave participants a script to follow in asking credit card companies to maximize their card limits, then funneled them to "coaches" who processed payments used to purchase more Teach Me to Trade products and services.
"The allegations depict a cold-hearted scheme that preyed on the elderly, the desperate, and even the unemployed by promising financial security, while instead robbing victims blind," SEC Chairman Christopher Cox said in a statement.
tharvey@sltrib.com
