Another stock scandal....TORONTO, Feb 27, 2001 (Canada NewsWire via COMTEX) -- As the result of a 20 month investigation the Federal Bureau of Investigation, the Ontario Securities Commission and the Royal Canadian Mounted Police Toronto West Commercial Crime Section have successfully dismantled a highly complex criminal organization operating in the Greater Toronto Area with tentacles reaching around the globe. This criminal group operated a "virtual boiler room" victimizing people as far away as New Zealand.
Arrested and charged with conspiracy to commit fraud, among other charges, are:-
Alan BENLOLO, age 32, of Vaughan, Ontario.
Elliot BENLOLO, age 34, of Vaughan, Ontario.
Joseph COHEN, age 42, of Mississauga, Ontario.
Mark ROTH, age 34, of Toronto, Ontario.
Abraham BENITAH, age 36, of Vaughan, Ontario.
James HALIOUA, age 38, of Toronto, Ontario.
Warrants are outstanding for:
Shlomo SARANGA, age 53, of Toronto, Ontario.
Baruch CONFINO, age 45, of Thornhill, Ontario.
In May 1999 the Toronto West Detachment of the Royal Canadian Mounted Police began to receive complaints from investors who had been defrauded in an elaborate "stock swap" scheme.
As a result of these complaints, investigators from the RCMP immediately initiated a joint investigation in partnership with the Detroit F.B.I.and the OSC.
The focus of the investigation was the alleged fraudulent conduct of the accused in relation to their roles in purported brokerage firms. These brokerage firms had no actual physical presence other than a Toronto or Montreal mail drop address.
This fraudulent "stock swap" scheme occurred in two phases and took place over a four year time span. The first phase of this fraud is known as the "pump and dump". In this phase, investors were randomly contacted by telephone and solicited by a bogus brokerage firm to purchase shares in a variety of microcap companies whose share prices were quoted on the NASD bulletin board.
Investors were enticed to pay a highly inflated value for the share purchase and they eventually received share certificates from the bogus brokerage firm. After this initial distribution of shares was complete, the quoted value of the microcap stocks fell dramatically.
The second phase of the fraud began when the victim investors were contacted by a representative of another bogus brokerage firm that was part of this criminal organization. This time, investors were falsely led to believe by the accused that they were retained to privatize the microcap company whose shares the victim owned.
The victim was then offered a premium price for the microcap shares to complete the privatization deal. The victim investor was falsely offered payment for the microcap stock in the form of shares in large blue chip corporations at a discounted price.
The fraud was completed when the victim paid in advance the difference in share prices between the microcap and blue chip companies. The purported difference in share price was generally in the range of $15 dollars US to $25 dollars US per microcap share. In some cases, the victim investor also paid in advance for additional blocks of shares in the blue chip corporations.
Once the funds were paid, the share exchange and/or the delivery of blue chip shares was never consummated. The bogus brokerage entities eventually disappeared and the investor was left with no recourse to locate the perpetrators.
The accused utilized aliases, Internet websites and a variety of false documentation to convince investors of the legitimacy of their criminal enterprise.
To date, the RCMP has received complaints from approximately 150 victim investors from around the world whose losses total approximately $ 4 million Dollars. Individual losses range between $1,500 to $675,000 Dollars.
The success announced today is a graphic example of how international law enforcement agencies can work together to dismantle criminal organizations no matter where they call home.
By forming strategic international partnerships, the RCMP, the FBI and the Ontario Securities Commission have effectively shattered a major criminal network that was very active in fraudulent activity and the victimization of unsuspecting people. This investigation has shown that borders will no longer benefit criminals in their illegal activities.
CONTACT: For further information: please contact: Cst. Michele PARADIS, RCMP
Media Relations Officer, Office (416) 952-4619, pager (416) 715-2375; Rowena
McDougall, Ontario Securities Commission, office (416) 593-8117
News release via Canada NewsWire, Toronto 416-863-9350
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