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ALEXANDRIA, Va. (AP) -- Prosecutors are blurring the line between salesmanship and fraud by bringing criminal charges against two self-proclaimed stock trading experts who touted their abilities in late-night infomercials, defense lawyers said Monday.
A federal jury heard opening statements in the fraud trial of Linda Woolf, 49, of Sandy, Utah, and David Gengler, 35 of Draper, Utah. The two were described in court Monday as two of the most successful salespeople associated with a company called Teach Me to Trade, which offers expert advice and software for making money in the stock market.
Prosecutors said Woolf and Gengler pretended to be successful investors to defraud victims out of millions of dollars and persuade seminar participants to spend tens of thousands of dollars each on Teach Me To Trade products. Both worked independently and weren't business partners, according to court documents.
Prosecutors said tax returns and trading records show that Woolf never made a profit in the stock market while Gengler lost money in some years and sat out of the market in others.
"Had those attendees known the truth about these defendants ... they never would have spent tens of thousands of dollars" on Teach Me to Trade's classes and software, said prosecutor Derek Anderson.
Lawyers for Gengler and Woolf said, however, that participants in the seminars got exactly what they paid for -- expert assistance on making money in the stock market through training in sophisticated trading strategies.
"The things they were teaching were legitimate and their belief in what they were doing was legitimate," said Woolf's lawyer, Mark Schamel.
Gengler's lawyer, Christina Sarchio, acknowledged that Gengler may have embellished some of his remarks to seminar attendees, which were videotaped and will be played at trial. But she said they fall far short of anything approaching fraud.
"There's a difference between being a salesman and a fraudster," Sarchio said.
Both defense lawyers questioned why Woolf and Gengler have been singled out for prosecution. The two were independent contractors for Teach Me to Trade, which is a subsidiary of a publicly traded company, Cape Coral, Fla.-based Whitney Information Network.
Schamel said the company continues to teach the exact same courses taught by Woolf and Gengler, but no company executives have been charged.
Andreson said Gengler and Woolf were the most successful people affiliated with the company and that while others may be equally culpable, the two were at the center of the fraud.
According to the Securities and Exchange Commission, which has filed civil fraud charges against the two, Woolf made $4 million in commissions for selling Teach Me to Trade products, while Gengler made about $2.25 million.
The company's annual report states that it had $172 million in revenue in 2008, about 60 percent of which now comes from a licensing deal it holds to conduct classes based on the best-selling book "Rich Dad Poor Dad" by Robert T. Kiyosaki.
Company employees are expected to be called during the trial to testify, lawyers said.
(Copyright 2009 by The Associated Press. All Rights Reserved.)
