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October 17, 2019Cart

Business

by Fairfield County Business Journal
by FCBJ

Stamford businessman charged in $2M securities fraud scheme

A federal grand jury in New Haven on Nov. 20 returned a 39-count superseding indictment against Stamford resident Thomas Connerton for various offenses stemming from an investment scheme that allegedly defrauded individuals of more than $2 million, according to a Dec. 1 announcement from John H. Durham, U.S. Attorney for the District of Connecticut.

In March, the grand jury had charged the 65-year-old Connerton with fraud and money laundering offenses. The superseding indictment added a count of tax evasion to those charges.

Connerton was the founder, president and CEO of Safety Technologies LLC, a company whose principal place of business at various times was in Stamford, Westport, Simsbury and Madison.

Founded in 2006, Safety Tech purportedly developed and commercialized what it maintained was a highly durable, puncture- and cut-resistant material that was to be used in the surgical glove market and other related markets. Safety Tech has not yet obtained any patents from the U.S. Patent and Trademark Office, and Connerton did not register Safety Tech’s securities with the U.S. Securities and Exchange Commission, according to Durham’s office.

The indictment alleges that, beginning around June 2009, Connerton induced victim-investors to provide him funds and to buy Safety Tech securities by falsely representing that the valuation of Safety Tech was realistically in the tens or hundreds of millions of dollars; that a lucrative deal to sell or license his glove technology was imminent; and that he would use their funds for research and development, product testing and to bring the product to market.

Connerton offered his investors small amounts of equity in Safety Tech through “subscription agreements” or investment contracts through which he sold what he described as “units.”

It is alleged that Connerton made numerous other false representations to investors, including stating in September 2015, “I will go on the record to state that there is not a single investor that will lose one dollar invested in Safety Technologies.”

The indictment alleges that even though Connerton represented to “victim-investors” and potential “victim-investors” that the funds they invested would be utilized for the aforementioned uses, he instead used those funds to pay personal expenses including, on two separate occasions, to buy diamond engagement rings from Tiffany & Co. Connerton also used funds to repay loans to an earlier investor.

Through this scheme, it is alleged that Connerton defrauded more than 50 investors of more than $2 million.

The indictment further alleges that Connerton engaged in monetary transactions in an attempt to conceal from the FBI and the SEC the nature and source of funds received by Safety Tech from the sale of Safety Tech securities. Connerton allegedly negotiated checks and bought bank checks in order to move the fraudulent proceeds from one account to another.

Finally, the indictment alleges that Connerton willfully failed to pay $271,375 in federal income taxes between 2004 and 2015.

The indictment charges Connerton with 12 counts of wire fraud, one count of mail fraud and 18 counts of securities fraud, offenses that carry a maximum term of imprisonment of 20 years on each count. The indictment also charges Connerton with six counts of money laundering, an offense that carries a maximum term of imprisonment of 10 years on each count; one count of money laundering conspiracy, an offense that carries a maximum term of imprisonment of 20 years; and one count of tax evasion, an offense that carries a maximum term of imprisonment of five years.

Connerton has been detained since his arrest on March 9. A trial is scheduled for May 9, 2018, before U.S. District Judge Stefan R. Underhill in Bridgeport.

Durham stressed that an indictment is not evidence of guilt.