U.S. charges Quebec man with securities fraud
Peter Brieger, Canwest News Service
Published: Saturday, April 26, 2008
TORONTO - A Montreal penny-stock promoter has been charged in North Carolina with securities fraud for his alleged role in a $23.4-million US pump-and-dump scheme.
State authorities laid conspiracy and money laundering charges this week against Bryan Kos and American David Hagen after a grand jury returned a two-count indictment. None of the allegations has been proven.
The charges come just more than a year after the U.S. Securities and Exchange Commission imposed fines on the Montrealer and another American colleague, Donald Oehmke, of $650,000 and $1.5-million, respectively, for fraudulently selling shares in public companies. The SEC settlement did not carry an admission of wrongdoing.
Oehmke is listed in the criminal charges as one of eight unindicted co-conspirators.
In a 29-page indictment, the U.S. attorney in Charlotte, N.C., alleges that Kos and Hagen -- who was convicted in 1990 of mail and bankruptcy fraud as well as money laundering -- earned $23.4 million by artificially creating demand for shares in virtually worthless companies between 2003 and 2006.
Those companies included BodyScan, Twister, Absolute Health, Concorde, BioHeal and GTX Global. Hagen was GTX's chief executive, according to the indictment.
Both men and the alleged co-conspirators are alleged to have hidden their ownership in the companies through various offshore entities and marketed the shares via the Internet, unsolicited faxes, press releases and disclosure documents.
Those promotional materials contained "material factual misrepresentations and omissions," including earnings projections that were known to be "unrealistic and unjustifiable," statements about company operations that were "false," and did not disclose that two of the co-conspirators have criminal records, the indictment says.
© The Calgary Herald 2008
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