Fort Lauderdale ‘Spongebuddy’ developers ripped off elderly investors, SEC alleges in lawsuit

Dec. 02--Two operators of a Fort Lauderdale company that developed "Spongebuddy," a sponge-like cleaning glove, are being sued by the Securities and Exchange Commission for allegedly defrauding elderly investors.

The SEC's complaint, filed in U.S. District Court for the Southern District of Florida, alleges Joseph A. Rubbo, 54, and his sister, Angela Beckcom Rubbo Monaco, 45, with defrauding investors through penny stock offerings by their companies VIP TV LLC, VIP Television Inc., and The Spongebuddy LLC, originally located in Fort Lauderdale and Oakland Park. Both are residents of Coral Springs.

The SEC also alleged that company associate Steven J. Dykes, 61, of Fort Lauderdale with violating broker-dealer registration provisions.

A few days before the SEC's complaint, the U.S. Attorney's Office for the District of Colorado filed criminal charges against Rubbo, Monaco, and Dykes.

On Friday, a man who identified himself as Joseph Rubbo responded to an email to VIP Television, saying he wasn't aware of an SEC lawsuit or charges. He said his company, which takes video of live events, was still operating. Rubbo's lawyer, Alvin Entin, didn't return calls Friday. Monaco and Dykes couldn't be reached for comment.

The charges are part of an initiative against repeat offenders by the Miami regional office which has resulted in enforcement actions against 23 individuals, nine of whom also have been charged by criminal authorities.

Eric Bustillo, regional director of the SEC, said the agency is being more aggressive about pursuing fraudsters "who don't learn their lesson the first time around."

Rubbo and Monaco raised at least $5.4 million from 11 primarily elderly investors to fund the growth of their entertainment business and develop the Spongebuddy, according to the SEC's lawsuit.

The SEC alleges that Rubbo and Monaco controlled the companies and hired Dykes to cold call investors and pitch investments in VIP. Dykes allegedly told an investor that the Starz cable channel and Pandora Radio were interested in buying VIP, and that Spongebuddy would be featured on ABC-TV's reality show "Shark Tank" and marketed on the QVC shopping channel, the lawsuit claims.

Rubbo and Monaco misappropriated more than $2.6 million in investor funds, according to the SEC.

"Rubbo and Monaco defrauded investors by stealing millions of dollars from elderly investors which they spent on themselves and their family members instead of investing in their businesses," said Steven Peikin, co-director of the SEC's Enforcement Division, referring to allegations in the complaint.

The SEC is seeking the return of any ill-gotten gains with interest, monetary penalties, and a permanent injunction against the individuals from participating in any penny stock offering.

The federal securities agency said Rubbo and Monaco have been convicted in prior securities schemes. Rubbo pled guilty in 2003 to racketeering and money laundering charges in a boiler-room operation in South Florida, and was sentenced to 52 months in prison, according to the SEC complaint.

[email protected] or 561-243-6650, twitter: @marciabiz

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