AG Platkin: NJ Bureau of Securities Files Enforcement Action Against a Job Placement and Recruiting Start-Up Company That Defrauded a New Jersey Investor
TRENTON – Attorney General Matthew J. Platkin announced today that the New Jersey Bureau of Securities (“Bureau”) within the Division of Consumer Affairs (“Division”) has filed a civil enforcement action against a Bergen County man and an associate who defrauded at least one New Jersey investor in an investment scheme tied to a job recruiting software service they were purportedly trying to grow.
According to a civil complaint filed in Superior Court in Bergen County today, Michael Lakshin, of Fair Lawn, New Jersey, Edward Aizman, of Brooklyn, New York, and their company Bowmo, Inc. (“Bowmo”) used fraud and deception to convince one of Lakshin’s childhood friends to liquidate her retirement fund to invest in their start-up business venture, and then diverted most of those funds for Lakshin's and Aizman’s personal use.
The investor funds were used for cash advances, a stay at a Cape Cod bed and breakfast, and purchases at a Jaguar Land Rover dealership and a Brunelli Cucinelli luxury designer store in New York City, among other personal expenditures.
The lawsuit seeks a court order permanently enjoining Bowmo, its president and chairman Lakshin, and its founder and CEO Aizman from issuing, offering, or selling securities in New Jersey. It also asks the Court to assess civil monetary penalties, restitution plus interest and expenses for the victim, and disgorgement of all profits and funds gained from the scheme.
“The defendants in this case shamelessly bankrolled their lavish lifestyles with someone else’s hard-earned retirement savings,” said Attorney General Platkin. “The lawsuit announced today sends a clear message that this kind of blatant exploitation of investors will not go unpunished in New Jersey.”
“The defendants callously used a personal connection to lure an unsuspecting victim into a money grab scheme disguised as an investment opportunity,” said Cari Fais, Director of the Division of Consumer Affairs. “Our lawsuit seeks to hold them accountable for their unlawful conduct, claw back their ill-gotten gains, require them to make the victim whole, and prevent them from defrauding anyone else.”
The civil complaint alleges that from April 2020 through August 2020, Lakshin, Aizman, and Bowmo (through Lakshin and Aizman), offered and sold at least $84,681.19 of Bowmo’s securities in the form of a convertible note (the “Bowmo Note”) to at least one New Jersey investor.
Lakshin and Aizman represented to the investor that the Bowmo Note was an investment opportunity that would provide a significantly higher return than the investor’s retirement savings account. Additionally, Lakshin informed the investor that Bowmo was a successful company that had made him rich through its success in recruiting and placing job candidates, and that the investor could also profit by investing her funds in Bowmo.
Lakshin leveraged his childhood connection with the investor to convince her to invest in Bowmo. According to the civil complaint, once Lakshin learned about the investor’s retirement account at another financial institution with a balance of $90,189.21, he began a campaign to pressure the investor to liquidate the account for the purpose of buying the Bowmo Note.
Through a series of text messages, Lakshin assured the investor that she would “realistically” be able to earn “A MUCH GREATER return” with Bowmo and that by the end of June 2020, Bowmo would “already be full” with investors. Lakshin also falsely informed the investor that she should not have any taxes or penalties withheld when withdrawing funds from her retirement account. Lakshin assured her that if any taxes or penalties had to be paid as a result of the liquidation, Bowmo would reimburse her.
When the investor informed Lakshin via text message on June 21, 2020, that “something doesn’t feel right,” he continued to pressure her, stating if she was changing her mind he was “going to look really bad in front of [his] partners.” He also stated “We gave all the guarantees and promised to reimburse you for your loss…”
On June 25, 2020, the investor liquidated her retirement account, which included two charges: a “surrender charge” of $5,366.26, and a “mortality and expense risk charge” of $141.76. This withdrawal also exposed the investor to paying taxes on those funds, as she was not rolling them over to another qualified retirement plan.
On July 2, 2020, the investor met with Lakshin and Aizman in a restaurant, at which time they presented her with a Bowmo subscription agreement, which the investor signed. Later that month, the investor wired $84,681.19 from her bank account to a Bowmo bank account controlled by Lakshin and Aizman.
Prior to investing, Lakshin provided the investor with access to a Bowmo Investor Package, which represented, among other things, that investor funds would be used to further develop Bowmo’s software, expand its marketing business, make strategic hires, and cover general corporate expenses. However, contrary to those representations, the defendants misused the investor’s funds by diverting them for personal and non-business-related purposes including, but not limited to, car payments, grocery and clothing shopping, and travel expenses.
The defendants also misappropriated the investment money by transferring some of those funds to bank accounts held by a separate and unrelated entity, Lionscross, LLC, solely owned by Lakshin, and to family members such as Aleksandra Aizman. As a result of their unlawful receipt and use of investor funds, Lionscross, LLC and Aleksandra Aizman are named as defendants in the lawsuit.
The lawsuit filed today alleges that all the named defendants, including Bowmo (through Lakshin and Aizman), violated the New Jersey Uniform Securities Law through false and misleading statements and the omissions of material facts including:
- misrepresenting that the investment proceeds would be used for proper business purposes of Bowmo;
- failing to disclose that the funds would instead be misused by the individual defendants for their personal use;
- falsely stating that the investor would not be financially penalized for liquidating her retirement account.
“This case serves as a sobering example of why it’s vitally important to investigate investment products, even those offered by someone you know and trust,” said Elizabeth M. Harris, Bureau Chief. “It’s also an opportunity to remind our residents that while fraudulent investment schemes come in a variety of forms, the pressure to act fast to avoid missing out on a hot investment is a universal red flag of fraud that should not be ignored. In addition to doing their due diligence before investing, we urge New Jerseyans to follow their instincts when a transaction doesn’t pass the smell test.”
The Bureau’s investigation was handled by Deputy Bureau Chief Amy Kopleton and Supervising Investigator Myles Orosco of the Enforcement Unit. Deputy Attorneys General Michael Eleneski and Mikhaeil Awad of the Securities Fraud Prosecution Section in the Division of Law’s Affirmative Civil Enforcement Practice Group are representing the Bureau in this matter, under the supervision of Assistant Attorney General Brian F. McDonough.
The Bureau is charged with protecting investors from investment fraud and regulating the securities industry in New Jersey.
It is critical that investors “Check Before You Invest.” Investors can obtain information, including the registration status and disciplinary history, of any financial professional doing business to or from New Jersey, by contacting the Bureau toll-free within New Jersey at 1-866-I-Invest (1-866-446-8378) or from outside New Jersey at (973) 504-3600, or by visiting the Bureau’s website at www.NJSecurities.gov. Investors can also contact the Bureau for assistance, or to raise issues or complaints about New Jersey-based financial professionals or investments.
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