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Florida Agents Charged with Selling Millions of Dollars in Unregistered Securities

9/5/2003

CONTACT: Nina Banister
(850) 413-2842

TALLAHASSEE – Four southwest Florida insurance agents are facing several felony counts for their alleged sale of millions of dollars in unregistered securities to investors throughout Florida and several states.

The charges are the result of an investigation by the Department of Financial Services' Division of Insurance Fraud, the Division of Agent and Agency Services' Bureau of Investigation, the Office of Financial Regulation's Bureau of Financial Investigations and the Division of Legal Services. Three of the four men were taken into custody yesterday, and more arrests are anticipated. The sale of unregistered securities is a third-degree felony punishable by up to five years in prison. In addition to the criminal charges, administrative charges have been filed that could lead to revocation of their insurance agent licenses.

"Unsteady stock markets and record low interest rates have provided motive for these types of schemes," said Florida's Chief Financial Officer Tom Gallagher, who oversees the Department of Financial Service. "Consumers absolutely must do diligent research before making any investment decision."

Investors should verify prior to purchase that securities are registered by visiting the Department of Financial Services' website at www.fldfs.com or by calling the department's consumer helpline at 1-800-342-2762.

Forrest D. Riddle, 58, of Valrico, is charged with two counts; Steven A. Trout, 53, of Cape Coral, is charged with 12 counts; and Robert A. McDuffie, 31, of Port Charlotte, is charged with two counts. Riddle was booked into the Hillsborough County Jail, McDuffie was booked into the Charlotte County Jail, and Trout was booked into the Lee County Jail. Local sheriff's deputies assisted in the arrests. A fourth man is also charged with four counts and is still being sought.

The agents sold the securities for 21st Century Satellite Communications Inc. The corporation provided satellite and cable services, Internet access and customized community-specific intranet services, with marketing geared toward multi-dwelling units, gated communities, institutions and retirement communities.

Between 1997 and 2001, investors in Florida, North Carolina, Tennessee, Nebraska, California, and Hawaii were sold an estimated $23 million in 21st Century Satellite securities. Officials believe $12 million in securities were sold in Florida alone. 21st Century Satellite was never registered in Florida as a securities dealer or investment advisor, and the securities were never registered with the state. Investors lost their money and the business shut down in 2001.