Gaming Factory Hit for $2 Million in Boiler Room Case

The United States District Court of Southern Florida on July 18 finalized its judgment in the case between the Securities and Exchange Commission and The Gaming Factory.

The Gaming Factory, prior to June 11, 2002, operated Internet gambling sites at www.playersgalaxy.com and www.mrsportsbook.com.

The SEC's complaint with The Gaming Factory is related to securities fraud and was registered against The Gaming Factory Inc., a Panama corporation, and The Gaming Factory Inc., a Florida corporation. Richard Onorato, the group's president, was also named.

The company has been ordered to pay a $1,986,750 fine representing the amount of money the company gained illegally, as well as prejudgment interest of $113,352. Onorato has been ordered to pay civil penalties of $120,000.

Kerry Zinn, the senior trial counsel for the SEC's southeast regional office, said the company and Onorato were given ten days to pay their fines and failed to do so. She said the matter has been turned over to a collection agency.

In April of 2002, the SEC sought a temporary restraining order and preliminary and permanent injunctions against the defendants for violations of the Securities Act of 1933 and the Securities Exchange Act of 1934.

In its suit against The Gaming Factory, the SEC stated that company received $1.9 million from about 75 U.S.-based investors in a 16-month period. The SEC states that the company's sales staff lied about stock availability to make investors feel they should invest immediately and also that the company lied about having an online gambling license and a land-based gambling license from Panama.

The suit stated that the company "operates in a typical boiler room manner by soliciting investors through a group of approximately 5-10 in-house sales representatives working from lead lists to 'cold call' prospects."