Associate of defunct Great Auk Wireless founder seeks dismissal in fraud case
BRATTLEBORO — An alleged mentor and business associate of a man accused of defrauding up to 10,000 customers is hoping to leave some legal problems behind.
Stuart A. Fraser, who was a vice president at the investment firm Cantor Fitzgerald at the time of alleged crimes, was named in lawsuits claiming that he and Homero Joshua Garza, who founded Great Auk Wireless High Speed Internet in Brattleboro, defrauded customers using cyber currency called "hashlets." According to one filing, about $19 million in revenue was collected.
Documents filed with United States District Court for the District of Connecticut on Sept. 27 showed that Fraser is requesting a motion to dismiss a complaint in which four plaintiffs are seeking damages from Fraser and Garza under the Connecticut Uniform Securities Act.
Fraser is accused of "aiding and abetting common law fraud under Connecticut law stemming from an alleged scheme to defraud investors," according to the documents. Charges were filed against Garza and his Connecticut-based companies GAW Miners LLC and ZenMiner LLC.
"Plaintiffs have not pled sufficiently or with the requisite particularity that Fraser had control of a primary violator or was a culpable participant in the alleged primary violations," Fraser's motion to dismiss stated. "In the alternative, if plaintiffs' federal claim against Fraser is dismissed, the court may decline to exercise supplemental jurisdiction over the remaining state law claims and dismiss plaintiffs' state law claims."
Fraser was an investor in Optima Computers, which Garza founded in Brattleboro in 2002. When Optima went out of business, Garza and Fraser started Great Auk. An approximately $64,000 grant to Great Auk from the Vermont Telecommunications Authority was intended to go towards expanding internet access in an underserved region of the Green Mountain State but was later returned to the state.
In December 2015, the U.S. Securities and Exchange Commission filed charges in federal court in Connecticut. The commission said GAW Miners and ZenMiner did not own enough computing power for the services it offered. Most investors paid for a share of computing power that never existed, according a press release issued at the time. Returns paid to some investors allegedly came from proceeds generated from sales to other investors.
Court documents previously filed in the United States District Court for the District of Vermont said Garza and the defendants "used the lure of quick riches from a 21st-century payment system known as virtual currency to defraud investors. Though cloaked in technological sophistication and jargon, defendants' fraud was simple at its core — defendants sold what they did not own and misrepresented the nature of what they were selling."
During the spring of 2015, the SEC received computer files showing that Garza sold $20,755,203 in hashlets. About $15 million was paid back to investors.
Call Chris Mays at 802-254-2311, ext. 273.
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