U.S. accuses Canadians of running $25M COVID-19 stock swindle
U.S. authorities accuse five Canadians of running a methodical $25-million investment fraud that climaxed with fake promises of producing COVID-19 protective equipment at the height of pandemic panic.
The four men and one woman are accused of taking the old pump-and-dump stock fraud method to higher levels of obscurantism.
They are variously accused of using a phony passport, fake identities and bogus lawyer’s letters to resurrect and steal defunct companies and using foreign trading accounts to hide who controlled them.
The companies’ stocks were then artificially inflated using plagiarized websites, email campaigns and sales calls, U.S. authorities allege.
Some of the claims to boost share value preyed on pandemic fears: one firm claimed to make medical masks and another touchless sales kiosks for retailers. Neither did either of those things, according to securities officials.
The enforcement actions announced last week by the U.S. Securities Exchange Commission (SEC) target: Shane Schmidt, 52, of Vancouver; Nelson Gomes, 38, a resident of Bahamas and Hong Kong; Michael Luckhoo, 31, of Mississauga, Ont.; Douglas Roe, 47, of Vancouver; and Kelly Warawa, 36, of
Vancouver.
Schmidt also faces criminal charges of securities fraud and conspiracy to commit securities fraud.
Among the stocks authorities say were illegally manipulated was a Minnesota penny stock company called Sandy Steele Unlimited, Inc. Originally started in 1968 by a woman named Sandy Steele, it slid into inactivity and was dissolved in 2006.
Almost 15 years after its demise, the company was resurrected.
Change of control documents were filed with the Over-the-counter Markets stock service that facilitates public trading in companies not listed on national securities exchanges.
The documents declared that Sandy Steele, the company, changed hands in 2017 when Sandy Steele, the original president, resigned; someone named John Scott took over. The documents showed they had been notarized in Vancouver.
The FBI says the corporate resurrection was based on lies.
The documents were fake, the takeover was fake, the reinstatement claims were fake and even John Scott was fake.
An FBI agent tracked down the real Sandy Steele.
“She did not sign, nor was she even aware of, the documents purporting to reflect her resignation,” FBI Agent Keith Brown said in a sworn statement.