Fake British billionaire, Keenan Alexander Gracey scammed Seattle investors out of $6 million.
Last January, federal prosecutors in Seattle went to court to block a 27-year-old Newcastle man from being released on bail. Keenan Alexander Gracey had been arrested just before Christmas on charges of a $6 million stock fraud that had claimed dozens of victims in Washington and California, and prosecutors were increasingly certain that Gracey would simply return to stealing as soon as he made bail.
Indeed, nearly everything federal officials had learned about the athletic and charismatic young man suggested an almost reflexive tendency to defraud.
Gracey lied constantly and brilliantly, according to investigators. At the height of his scamming, prosecutors say, Gracey was routinely passing himself off as 6-foot, 9-inch Oxford-educated professional athlete and British aristocrat with palatial mansions and insider knowledge of multimillion-dollar stock deals. In truth, prosecutors say, Gracey was a Canadian national whose father worked for Boeing. He never went to college or held an actual job while in the U.S. He used a fake British accent and wore lifts in his shoes.
Yet with no formal training, prosecutors say, Gracey had somehow mastered complex financial concepts and strategies. He had carefully cultivated the persona of a larger-than-life, business-savvy playboy — complete with leased Lamborghinis and a $225,000-a-month Beverly Hills estate — then used that persona to groom an ever-expanding networks of victims. Frequently he persuaded them to liquidate their life savings, take out ruinously high-interest loans, and rope in their own family and friends.
Perhaps most worryingly, prosecutors said, Gracey showed almost no fear of consequences. To the contrary, when his first full-scale stock scheme was shut down by U.S. securities regulators, in May of 2018, Gracey simply changed his name and the name of the company, and raked in another $2 million. He was recruiting new victims almost until the day he was arrested, shortly before Christmas, 2018.
“It is extraordinary that Gracey continued swindling investors even after being served with a federal restraining order,” said Assistant U.S. Attorney Seth Wilkinson in an interview shortly before Gracey was sentenced Friday to 15 years in federal prison. “Usually, securities fraudsters will at least lay off for a while when they get sued by the SEC. Gracey didn’t even slow down.”
Federal prosecutors said fraud schemes as sophisticated as Gracey’s are generally the work of veteran criminals in their 40s and 50s. But Gracey was 25 when he pulled his first major scam — selling phony stock in a Bellevue startup in 2016. And it’s likely he was scamming much earlier than that.
In fact, from a fairly early age, Gracey appears to have been dissatisfied with the actual facts of his life.
Though talented enough at soccer to win a place on the Canadian National Team’s youth program in high school and to play in England after graduation, federal authorities say, Gracey was soon concocting a much more impressive resume.
He told a woman he met in 2011 that he was a professional athlete “involved in stocks” with a “trust fund,” and eventually married her, according to an investigation by the Securities and Exchange Commission. In 2012, according to the Federal Bureau of Investigation, Gracey told a family friend he was on the Seattle Seahawks’ training team. (Seahawks officials say they have no record of anyone under that name.) Gracey told acquaintances he owned expensive cars and a home on a Newcastle golf course, but all had actually been rented for him by his father, prosecutors say.
In early 2015, according to the SEC, Gracey’s wife left after discovering his fabrications. But Gracey not only maintained his bogus life story, but began to cash in on it.
Jeff Parks, an Eastside business owner, says he met Gracey in 2015 at a Bellevue steakhouse. Gracey claimed to be working out with the Seahawks while he awaited approval of his NFL contract, Parks recalls. He certainly looked the part: a photo with Parks shows the towering, exceedingly muscled physique that would become Gracey’s trademark.
But Gracey told Parks he needed money for rent and groceries while he trained, Parks recalls. Over the next several months he talked Parks and Parks’ business partner out of $25,000.
Early on, Parks recalls, Gracey was charming, personable, and earnest — “just like a college kid trying hard to get a job”. But soon, Parks said, Gracey became pushy, his stories less credible. After Gracey asked for $25,000 for cancer treatment for his mother, in May 2016, Parks and his business partner cut him off. Gracey, saying he was headed back to England to play rugby, largely broke off contact.
In fact, prosecutors say, Gracey was devising what would become his basic scam — selling so-called “pre-IPO” shares in companies he had no factual connection with.
In 2016, prosecutors, Gracey told acquaintances he was on the board of an actual Bellevue-based virtual reality education company called Fishytale, which, he falsely claimed, was soon going public. Gracey offered to sell his victims special pre-public company shares, for $1 each, on the promise they would jump to $60 once Fishytale went public.
Gracey’s smooth, knowledgeable presentation and his flashy lifestyle persuaded his victims to hand over tens of thousands of dollars, prosecutors say.
As the money rolled in, Gracey made substantial upgrades in both his scam and his life. Prosecutors say he began short-term rentals of lavish estates on Mercer Island, Clyde Hill, and San Diego, and eventually paid $225,000 a month for a manor in Beverly Hills. He rented high-end sports cars, including a Ferrari at $22,200 a month and a Lamborghini at $35,200.
He sometimes posed in front of them, usually shirtless, in photographs texted to his prospective investors. He entertained his victims at lavish parties and put them up in posh hotels, which he sometimes claimed to be part-owner of.
Gracey’s biography was going upscale, too. Prosecutors say Gracey now claimed to be the heir to a British industrialist, whose relatives had founded Lloyds of London and General Dynamics, while he himself had insider knowledge of top corporations and their plans for stock sales.
Gracey’s next scam involved Perspecta, a government services company to be created through the merger of three existing firms: DXC, Keypoint and Vencore. The companies and their merger were real, prosecutors say, but Gracey had no connection to them, nor were there any pre-IPO shares. But as with Fishytale, Gracey told victims that their $1 pre-IPO shares would increase 50-fold when the new company went public.
As before, Gracey employed a potent blend of polish and pressure. Prosecutors say he pushed victims “to liquidate retirement and educational accounts” and coached them on getting high-interest loans, even down to “the exact language they should use on the loan applications.”
Gracey encouraged victims to recruit friends and family, with the promise of bonus stock for each new investment.
He seemed entirely unconcerned about the personal damage he was causing. One victim asked Gracey whether a friend recently diagnosed with esophageal cancer could invest $25,000, according to prosecutors. “Yes it is possible for sure,” Gracey texted back. Another family turned over savings intended to help them care for their disabled son.