That seems to be exactly what happened..Like the others in the case, he also faces criminal charges, but so far he has not been arrested. In 2011 the Department of Justice listed him and Mr. Zigdon as fugitives.
SEC secures ban, fine for CO2 Tech's Weinbaum2012-10-11 11:33 MT - Street Wire
Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission
Also Street Wire (U-CTTD) CO2 Tech Ltd
by Mike Caswell
The U.S. Securities and Exchange Commission has secured a permanent penny stock ban and $10.3-million in financial penalties for Ariav Weinbaum, one of the defendants in the CO2 Tech Ltd. pump-and-dump case. (All figures are in U.S. dollars.) The SEC claimed that he and others, including former Pacific International Securities Inc. broker David Ricci, dumped $7-million worth CO2 Tech shares after the company falsely claimed to have a relationship with Boeing.
The penalties are contained in a judgment handed down on Tuesday, Oct. 9, by Miami Judge James King. The fine includes disgorgement of $7.07-million in ill-gotten gains, interest of $1.98-million and a $1.3-million civil penalty. The SEC's victory is a decision by default, as Mr. Weinbaum had stopped participating in the case after initially denying any wrongdoing.
According to the SEC, Mr. Weinbaum helped initiate the CO2 Tech pump-and-dump in January, 2007. He and an associate, Yitzchak Zigdon, received improperly issued shares in a purported debenture conversion and then hired promoters to tout the stock with misleading spam. During the scheme they and others allegedly sold $7-million worth of stock as the company went to $1.65. (It was last at 0.1 cent.)
Others charged included recidivist securities violator Jonathan Curshen, who faced both civil and criminal cases. Prosecutors claimed that he fraudulently promoted several stocks, including CO2 Tech, and funnelled $91.5-million through an account at HSBC Bank in Vancouver, which mostly represented proceeds from pump-and-dumps. A jury convicted him on the criminal charges in January, 2012, and he is serving a 20-year sentence (which he has appealed).
CO2 Tech charges
Full details of the allegations against Mr. Weinbaum, 37, are contained in a civil complaint that the SEC filed on Feb. 18, 2011, in the Southern District of Florida. The complaint described him as a lawyer with dual U.S. and Israeli citizenship. The SEC listed CO2 Tech as a sham pink sheets listing that had no significant assets or operations.
According to the complaint, the scheme began in January, 2007, after Mr. Weinbaum and Mr. Zigdon (who is also a defendant), acquired all of CO2 Tech's free-trading shares in a purported debenture conversion. Around the same time, the men hired Mr. Curshen's company, Red Sea Management Ltd., to help them sell massive quantities of the stock through nominee accounts.
The promotion began on Jan. 29, 2007, when CO2 Tech started issuing allegedly misleading news releases about a pollution control product. The company claimed to have been working on the product for over a decade, and said that it had a manufacturing operation in Israel and an office in London. In reality, the London office was just a mail drop and Israeli authorities could not find the manufacturing operation, the SEC said.
The next day, on Jan. 30, 2007, CO2 Tech claimed in a news release that Boeing had taken an interest in its product. The SEC said that Mr. Weinbaum paid for a series of misleading spam e-mails and faxes to spread the message. The e-mails were typical of stock spam, containing statements like, "IF BOEING LIKES CTTD SO WILL YOU!"
As the news and spam started going out, Mr. Curshen and Mr. Ricci carried out a series of wash trades that "jump-started" the stock, the complaint stated. They executed the trades at gradually increasing prices, helping push the stock to $1.65 from 91 cents. Volume that day was 12.2 million shares, up from 729,100 the day before. At the same time they started selling shares in substantial quantities, according to the complaint. Red Sea ultimately obtained $7-million in illegal profits for Mr. Weinbaum and Mr. Zigdon, which it wired to bank accounts in Israel and Switzerland, the SEC said.
The complaint sought disgorgement of ill-gotten gains, appropriate civil penalties and penny stock bans. In filing the case, the SEC acknowledged the assistance of the B.C. Securities Commission, the Costa Rican Police, the Israel Securities Authority, the United Kingdom Financial Services Authority and the City of London Police.
Mr. Weinbaum filed a brief answer to the complaint on Aug. 31, 2011, saying that there were no grounds for the SEC to obtain any judgment against him. His answer provided no details, and only contained general denials.
Like the others in the case, he also faces criminal charges, but so far he has not been arrested. In 2011 the Department of Justice listed him and Mr. Zigdon as fugitives.
Mr. Ricci, the lone Canadian in the case, previously pleaded guilty to the criminal charges, agreed to testify for the prosecution and received 18 months in jail. He is scheduled for release from the Moshannon Valley Correctional Institution in Pennsylvania on Aug. 31, 2013. He separately settled the SEC case by agreeing to a permanent penny stock ban.
Although Mr. Ricci is a Canadian, he is married to a Costa Rican and has a home in that country. When he was in Vancouver, he worked at PI for five years, leaving the firm on Nov. 17, 1999.
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