BOCA RATON, Fla. — Entrepreneur Ross Mandell raised $61 million from shareholders by sweet-talking investors and bullying brokers in his boiler room, federal regulators said recently.
The Securities and Exchange Commission filed suit against Mandell, head of Sky Capital Holdings, which traded on the London Stock Exchange's Alternative Investment Market from 2002 to 2006.
Shares in Sky Capital Holdings became worthless, and Mandell made it nearly impossible for Sky's brokerage customers to sell their shares, the SEC said.
Yet even as investors saw their Sky shares fall to zero, Mandell, 52, lived well, the SEC said. In 2006, Mandell made $1.5 million from Sky Capital Holdings and related companies.
Investors also paid for Mandell's personal expenses, including decorator fees for his penthouse at the Trump UN Plaza in Manhattan. And Mandell charged Sky for "extravagant" business trips to London that included first-class airfare, five-star hotels, fancy dinners and "adult entertainment," the SEC said.
Neither Mandell nor his attorney could be reached for comment. Mandell lives in an 8,000-square-foot home west of Boca Raton, according to property records.
The SEC suit named five other Sky Capital officials and brokers, including Michael Passaro, 46, of Boca Raton.
"This firm and these brokers went to great lengths to repeatedly lie to investors, pressuring them into buying stock without telling them it would be nearly impossible to sell those shares," said James Clarkson of the SEC's New York office.
Sky Capital brokers used high-pressure scripts to solicit investors, the SEC said. Mandell bullied brokers who submitted customer sell orders without first lining up a buyer, admonishing them to be a "team player."
Mandell also denied perks to brokers who didn't follow his rule of arranging a buyer before letting an investor sell Sky Capital shares. If a broker didn't "support the stock," the SEC said, Mandell would take away perks such as paid parking, cell phones, and other personal expenses.
The FBI raided Sky Capital's offices in November 2006, and its shares stopped trading. As a stockbroker, Mandell has a long list of regulatory run-ins and customer complaints.
In his latest venture, Mandell has launched RHM Productions, a Boca Raton-based company that promotes mixed martial arts events. Mandell reportedly has partnered with boxing promoter Don King.
Jeff Ostrowski writes for The Palm Beach Post. E-mail: jeff(underscore)ostrowski(at)pbpost.com.