Sean Fitzgerald Mescall, 30, was charged Wednesday with eight felony counts including securities fraud, obtaining property by false pretense and operating an "unlawful telephone room," by North Carolina Secretary of State law enforcement officers.
Investigators believe Mescall ran a company called Capitalstreet Financial LLC over the past three years. They believe Capitalstreet used a telephone boiler room setup to make calls pitching a scheme that promised high returns for people investing in a foreign currency trading operation.
Such schemes often pitch that profits can be made by purchasing foreign currency when its value drops against the dollar and then trading it back for dollars when its value rises.
The U.S. Commodity Futures Trading Commission, which investigated the case along with the Secretary of State's Office, also initiated civil action against Mescall on Wednesday.
Other law enforcement agencies providing support in the case were the Catawba County Sheriff's Office, the Charlotte-Mecklenburg Police Department and the Cornelius Police Department.
An initial study of known bank records related to the operation indicates at least 30 people invested more than $700,000 with Mescall. Investigators believe that while some monies were used to make foreign currency trades — although not for the huge profits claimed — large amounts of investors' funds were taken for private use by Mescall.
The N.C. Secretary of State's Office first received complaints from out-of-state investors about Capitalstreet earlier this year. Investigators were able to develop information from an informant inside the organization, leading up to Wednesday's actions.
According to Secretary of State Elaine F. Marshall, complaints have been received from Ohio, New York and Illinois, but none from inside North Carolina.
Mescall is a former registered securities dealer. Investigators believe the scam started after he lost his legitimate registration to sell investments.
Mescall was charged with four counts of securities fraud, three counts of obtaining property by false pretense, and one count of running an unlawful telephone room. He was taken into custody and placed in the Mecklenburg County Jail under $300,000 secured bond.
Secretary of State Securities agents with support from the other involved law enforcement agencies searched Mescall's home in Denver and Capitalstreet Financial offices in Cornelius throughout the day Wednesday.
Investigators said the case is ongoing and further actions and charges are possible.
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