Undercover Operation Nabs Market Insiders and Promoters in Penny Stock Market Sting
miami.fbi.gov
Department of Justice Press Release
For Immediate Release
October 7, 2010 United States Attorney's Office
Southern District of Florida
Contact: (305) 961-9000
Undercover Operation Nabs Market Insiders and Promoters in Penny Stock Market Sting
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, announced the filing of seven separate cases against “microcap” stock market insiders and stock promoters, charging numerous individuals with securities fraud and related charges. The term “microcap stock” refers to companies with low or “micro” capitalizations, meaning the total value of the company’s stock. Microcap companies typically have limited assets and its stocks tend to be low priced and trade in low volumes.
According to the charging documents and other court records, FBI agents conducted an undercover investigation into the alleged manipulation of thinly-traded companies with securities quoted in the over-the-counter market, commonly referred to as the “Pink Sheets.” As a result of the FBI’s efforts, public company officers, controlling shareholders, a transfer agent, and a promoter have been arrested and charged with conspiracy, securities fraud, mail fraud, and wire fraud. If convicted, the defendants face statutory maximums ranging from 5 years to 25 years in prison for each count of conviction.
The following seven criminal cases were announced today:
In United States v. Tzemach David Netzer Korem and Jean R. Charbit, Case No. 0-20732-CR-UU, defendants Korem, 57, a transfer agent from Los Altos, CA, and Jean Charbit, 65, a major shareholder from Miami, Florida, are charged with conspiring to manipulate the publicly quoted share price and trading volume of ZNext Mining Corp., Inc.
In United States v. Bruce Palmer, Case No. 10-60252-CR-MGC, defendant Bruce Palmer, 64, of Placitas, New Mexico, an officer of a publicly traded company, is charged with engaging in a scheme to manipulate the publicly quoted share price and trading volume of Accesskey IP, Inc.
In United States v. Larry Wilcox, Case No. 10-60260-CR-JIC, defendant Larry Wilcox, 63, of West Hills, California, an officer of a publicly traded company, is charged with conspiring to pay kickbacks to a pension fund fiduciary to induce the fiduciary to misappropriate money from a pension fund in order to buy restricted common stock at inflated prices.
In United States v. Anthony Mellone and Alex Parsinia, Case No. 10-3352-CR-WCT, defendants Anthony Mellone, 53, of Pompano Beach, Florida, and Alex Parsinia, 65, of Calabassas, California, each an officer of a publicly traded company, are charged with engaging in a scheme to pay kickbacks to a pension fund fiduciary to induce the fiduciary to misappropriate money from a pension fund in order to buy restricted common stock at inflated prices.
In United States v. Jeffrey Galpern, Case No. 10-3353-CR-WCT, defendant Jeffrey Galpern, 41, of Boca Raton, Florida, is charged with engaging in a scheme to manipulate the publicly quoted share price and trading volume of Crystal Properties Holdings, Inc.
In United States v. Steven Humphries and John Buckeye Epstein,Case No. 10-60259-CR-WPD, defendants Steven Humphries, 57, of Plano, Texas, and John Buckeye Epstein, 52, of Addison, Texas, each an officer of a publicly traded company, are charged with engaging in a scheme to pay kickbacks to a pension fund fiduciary to induce the fiduciary to misappropriate money from a pension fund in order to buy restricted common stock at inflated prices.
In United States v. Scott Sand, Case No. 10-60257-CR-WPD, defendant Scott Sand, 52, of Yucaipa, California, an officer of a publicly traded company, is charged with engaging in a scheme to pay kickbacks to a pension fund fiduciary to induce the fiduciary to misappropriate money from a pension fund in order to buy restricted common stock at inflated prices.
U.S. Attorney Wifredo A. Ferrer stated, “Securities fraud is an equal opportunity crime – it runs the gamut from very large to very small publicly traded companies. As today’s cases show, even microcap companies are plagued by fraudsters who seek to manipulate the stock market to line their own pockets. The prosecution of white collar crime, including securities, health care, and mortgage fraud, is one of my top priorities, and the U.S. Attorney’s Office will work cooperatively with law enforcement and regulatory agencies to bring these fraudsters to justice.”
John V. Gillies, Special Agent in Charge of the FBI’s Miami Office, stated, “Unsuspecting investors lose millions of dollars each year due to schemes that mislead investors and manipulate the prices of publicly traded securities through what are commonly referred to as “pump and dump” schemes. Securities markets must be regulated and transparent so investors can continue to trust and have faith in the system. Proactive investigations allow the FBI to prevent losses to victims by identifying those involved and holding them accountable for their unscrupulous actions.”
Also today, the Securities and Exchange Commission announced that it had filed separate civil cases against 20 defendants for engaging in fraudulent kickback schemes involving micro-cap stocks.
Mr. Ferrer commended the investigative efforts of the FBI and the cooperative efforts of the Miami Regional Office of the Securities and Exchange Commission. These cases is being handled by Assistant U.S. Attorneys Ryan Dwight O’Quinn, Bertha Mitrani and Richard Murad.
An indictment, information or complaint is only a charging document and a defendant is presumed innocent until and unless proven guilty.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the United States District Court for the Southern District of Florida at www.flsd.uscourts.gov or
pacer.flsd.uscourts.gov.
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