Federal prosecutors on Tuesday said they have madearrests in an international penny stock scheme that involved fraudulently inflating shares prices and trading volumes.
The fraud generated more than $140 million through various brokerage and bank accounts, according to a statement from the office of U.S. Attorney Loretta Lynch inBrooklyn.
Two people, Joseph Manfredonia, 45, of New Jersey, and Cort Poyner, 44, of Florida, were arrested on Tuesday morning, according to Peter Donald, an FBI spokesman.
A superseding indictment filed earlier this month also names four Canadians and three other U.S. citizens allegedly involved in the scheme.
The scheme involved fraudulently inflating share prices and trading volumes ofcertain penny stocks. The defendants also operated a so-called advance fee scheme, making false promises to investors to induce them to pay fees for non-existent services to sell their illiquid penny stock shares, according to the indictment.
Both schemes were allegedlyorchestrated by Sandy Winick, a Canadian who has lived in China, Thailand, Vietnam and the United States, according to the indictment.
Manfredonia used phony press releases to promote the penny stocks and recruited others to manipulate their prices and trading volumes, according to the indictment.
Poyner bribed brokers to purchase the penny stocks onbehalf of their clients, according to the indictment.
Gregory Curry and Kolt Curry, Canadians who also lived at various times in Thailand, managed call centers, and prepared false letters, websites and e-mail accounts used to deceive potential and actual victims. Kolt Curry also made phone calls to potential clients.
Gregory Ellis, a Canadian, acted as president of several companies that issued the penny stocks and called potential customers as part of the advance fee scheme, according to the indictment.
Gary Kershner, a U.S. citizen who lived in Arizona and Kansas, made false statementsto regulators and investigators, and created fraudulent documents, according to the indictment.
Songkram Roy Sahachaisere, aU.S. citizen who lived in California, promoted the penny stocks through Investsource Inc, a public relations firm he owned, according to the indictment.
William Seals, of California, bought and sold several of the penny stocks to manipulate their share price and market volume, according to the indictment.
Their lawyers could not be reached immediately for comment.
Winick has run into trouble with regulators in the past.
In 2010, the U.S. Securities and Exchange Commission won a default judgment against him after he failed to respond to a complaint accusing him of creating dozens of shell companies under a public company he controlled, First Canadian American Holding Corp, laterknown as Blackout Media Corp.
The SEC accused Winick of creating 59 subsidiaries in Blackout with no legitimate business purpose except to sell unregistered shares in the companies and pocketingthe proceeds.
In 2012, he was ordered to disgorge $3.2 million in ill-gotten gains and was permanently barred from thepenny stock market, among other penalties, according to court documents.
Tuesday 13 August 2013
Airline Stocks Drop On US Air-American Merger Suit
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The Department of Justice, six state attorneys general and the District of Columbia filed an antitrust suit against US Airways( LCC) and American Airlines' parent, AMR Corp., saying their proposed merger would lessen competition.
The pairing would create theworld's largest airline, worth about $11 billion, and cap a decade of airline mergers that's left about 85% of U.S. fliers with just four airlines tochoose from.
The announcement of the action came a week after the airlines announced they'd received clearance from the European Union for their merger.
Shares of US Airways were down 12% Tuesday amid a sector rout in the stock market todayUS Air and AMR, which is emerging from bankruptcy, announced the deal on Feb. 14, and antitrust regulators began a review process to determine whether further industry consolidation wouldboost ticket prices and hurt consumers.
U.S. Attorney General Eric Holder said in statement Tuesday, "This transaction would result in consumers paying the price — in higherairfares, higher fees and fewer choices."
The carriers have said the new company would have synergies that would enable it to keep costs down.
Southwest became one of the big four airlines with its 2011 acquisition of AirTran Airways. Among other recentpairings, Delta bought Northwest Airlines, and United Continental was formed by the merger of United and Continental in 2010.
The Department of Justice, six state attorneys general and the District of Columbia filed an antitrust suit against US Airways( LCC) and American Airlines' parent, AMR Corp., saying their proposed merger would lessen competition.
The pairing would create theworld's largest airline, worth about $11 billion, and cap a decade of airline mergers that's left about 85% of U.S. fliers with just four airlines tochoose from.
The announcement of the action came a week after the airlines announced they'd received clearance from the European Union for their merger.
Shares of US Airways were down 12% Tuesday amid a sector rout in the stock market todayUS Air and AMR, which is emerging from bankruptcy, announced the deal on Feb. 14, and antitrust regulators began a review process to determine whether further industry consolidation wouldboost ticket prices and hurt consumers.
U.S. Attorney General Eric Holder said in statement Tuesday, "This transaction would result in consumers paying the price — in higherairfares, higher fees and fewer choices."
The carriers have said the new company would have synergies that would enable it to keep costs down.
Southwest became one of the big four airlines with its 2011 acquisition of AirTran Airways. Among other recentpairings, Delta bought Northwest Airlines, and United Continental was formed by the merger of United and Continental in 2010.
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