A plea of guilty in stock fraud case

A Houston businessman charged with conspiring to manipulate the market price and demand for shares of Chimera Energy Corp. pleaded guilty to conspiracy to commit wire fraud and promised to cooperate with prosecutors.

Thomas Massey, who entered his plea Tuesday in U.S. District Court in Houston, faces up to five years in prison and up to $1 million in restitution to victims who bought shares at inflated prices. Sentencing is scheduled in June before Judge Vanessa Gilmore. Until then, Massey is free on an unsecured $50,000 bond, said his

attorney, Mike DeGeurin Sr., a Houston criminal defense lawyer.

Massey also agreed to cooperate with federal and state authorities, including testifying about the “pump and dump scheme,” according to the plea agreement Massey signed, referring to the process of artificially inflating the price of stock and then selling it to unwitting investors.

Massey was charged last year along with Andrew Farmer for their roles in allegedly manipulating the price of Chimera shares. Farmer’s trial is set for June before Gilmore.

Houston criminal defense lawyer Karima Maloney is representing Farmer and said he maintains his innocence and is “looking forward to the trial where the facts will come out.”

Massey helped to publish false press releases about Chimera Energy in 2011 and 2012 to drive up stock prices, according to information filed in court by the U.S. Attorney’s Office in Houston. In December 2011 and January 2012, Chimera launched a “sham” initial public offering and company executives recruited “straw investors” to make it appear ownership was widely distributed when it was in fact controlled by Chimera insiders, according to court documents.

Chimera was traded as a “microcap,” the term for small companies that typically have low share prices, trade on small stock exchanges and receive little attention from analysts.

Massey was part of a campaign to promote Chimera, which issued 34 news releases along with filings to the Securities and Exchange Commission that touted non-existent licensing deals and breakthroughs in hydraulic fracturing technology. Company executives hired an advertising firm to place ads promoting the company’s safe and waterless fracking techniques. Viewers were urged to “INVEST TODAY,” according to court documents.

Share prices of Chimera Energy increased dramatically and company executives began to sell their own holdings, according to court documents.

Massey received $338,000 for his work between June 2011 and December 2012 to further the conspiracy.