Four Canadians charged in penny-stock plot
Scheme defrauded investors of $140M, authorities allege
Four Canadians and five Americans engaged in a massive penny-stock fraud scheme that bilked investors in Canada, the U.S. and many other countries of more than $140 million, the U.S. Department of Justice said Tuesday.
One of the Canadians was arrested in Ontario and another one was among six suspects arrested in New York, Arizona, New Jersey, Florida and California, authorities said.
Two other Canadians are being sought in what the department is calling one of the largest international penny-stock frauds in history.
The arrests were the result of a multi-year investigation involving the FBI and the RCMP, the department said, adding it relied on wiretaps in the U.S. and undercover agents abroad.
The indictment alleges that the defendants were involved in a massive “pump and dump” scheme — buying controlling interests in sketchy startup companies, then artificially inflating their value by promoting them in fictitious emails, social media messages and news releases.
The fraudulent sales campaign generated more than $120 million in investments by tens of thousands of people in the United States, Canada and 33 other countries, authorities said.
Working out of boiler-room phone centres in Canada, Thailand and Britain, the defendants again victimized the same investors by convincing them to pay $20 million in advance fees in return for helping them sell their securities or join lawsuits to reclaim their losses, court papers said.
In some cases, it’s alleged the accused pretended to work for the U.S. Internal Revenue Service.
The list of victims included several hundred Canadians, department spokesman Zugiel Soto said in an email to The Canadian Press.
“Where others saw citizens of the world, the defendants saw a pool of potential marks,” U.S. Attorney Loretta Lynch said in a statement.
“They cheated, lied and swindled investors into buying billions of shares of worthless stock, then turned around and used a second scam to cheat those investors again.”
Heath Rodgirs, a senior fraud investigator with PrinceLangevin and Associates in Edmonton, said “pump and dump” schemes are very common and penny stocks — which often trade outside the major market exchanges — are particularly vulnerable.
“Because they’re so cheap and there’s so many of them, it gives a fraudster an opportunity,” he said.
“It doesn’t take much to set up a company and make it look like something. So just by the nature of penny stocks, there’s a greater ability for fraud in it.”
Two of the Canadian suspects — Gregory Ellis, 46, and Kolt Curry, 38 — have been arrested.
But authorities said Sandy Winick, 55, remains at large in Thailand and Gregory Curry, 63, has yet to be located.
Gregory and Kolt Curry are father and son, Soto said.
The American suspects are Gary Kershner, 72; Joseph Manfredonia, 45; Cort Poyner, 44; Songkram Roy Sahachaisere, 43; and William Seals, 51.
The charges include conspiracy to commit securities fraud, conspiracy to commit wire fraud, wire fraud, securities fraud and false personation of an officer of the United States.
If convicted, the accused could face up to 20 years in prison for each count of conspiracy to commit wire fraud, wire fraud and securities fraud, as well as up to five years for conspiracy to commit securities fraud.
The false personation charge could carry a three-year prison sentence.