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NEO man named in pump-and-dump has history of leading investors to losses: Plain Dealing
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 By Sheryl Harris, The Plain Dealer
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on September 26, 2014 at 11:04 AM, updated September 29, 2014 at 11:43 AM
 Associated Press
CLEVELAND, Ohio -- A Gates Mills man the SEC says helped orchestrate a pump-and-dump scheme has a history of leading investors into money-losing ventures.
The Securities and Exchange Commission filed a civil suit last week naming Jason Cope and seven other people in what the commission says was a sophisticated scheme to manipulate stocks in Gepco and other shell companies so investors would overpay.
The SEC contends Cope, a 41-year-old Kent State University alumnus who lives in Gates Mills, earned a 3,000 percent return on penny stocks that were hyped beyond their true value and then "dumped" on unwitting buyers.
Cope's alleged partner in the Gepco pump-and-dump, Izak Zirk de Maison (once known as Izak Zirk Engelbrecht) is in federal custody and faces criminal wire and securities fraud charges in what the FBI described as a parallel pump-and-dump scheme that involved a mining company called Lustros.
Although the affidavit the FBI filed with the court doesn't identify Cope by his full name, it describes a "Jason C." who owns Cope's company, Worldbridge Partners, as a person who consulted with de Maison, received kickbacks through Worldbridge and introduced de Maison to investors.
One of the Lustros victims is Cope's former high school teacher, a Lisbon resident who lost $200,000 of his own and another $200,000 from his children's trust fund. The FBI estimates total investors' losses at tens of millions of dollars.
This isn't Cope's first brush with securities regulators. It's simply his latest.
Cope started working as a stockbroker soon after he graduated Kent State with a finance degree in 1995. It didn't take long for his customers to start complaining to regulators about losses.
In a 1998 case, a National Association of Securities Dealers arbitration panel found that Cope "fraudulently or in a grossly negligent manner" put a client's funds at risk and ordered Cope and his brokerage firm to repay the client $31,000.
But it was in 1999 that Cope became embroiled in a bizarre Initial Public Offering fraud that would cost him his broker's license.
Cope had landed a job leading the Pittsburgh office of AC Financial. According to the Pittsburg Post-Gazette, Cope and his young sales team were a flashy crowd. They drove nice cars, wore sharp suits and promised investors they had unique access to hard-to-get shares from IPOs by companies including the World Wrestling Federation and United Parcel Service.
The AC Financial brokers told investors these "hot" stocks were only available through AC's partner firm, New York-based Milan Capital Group.
What investors and apparently some of the brokers weren't told: Ira Monas, the man who ran Milan, was serving time in prison on securities fraud charges and had no access to stocks. Nearly 200 investors sank $8.3 million into shares the SEC said were never actually purchased.
When investors became suspicious of what turned out to be bogus confirmations of their stock buys, Cope tried to calm them with promises Monas would explain everything when he returned from his trip to "Europe."
Cope, who didn't return calls from the Plain Dealer, has always contended that he was duped like everyone else. But as the broker in charge of AC Financial's Pittsburgh office, it was his responsibility to check out the stocks his team sold and to spot what the SEC said were obvious red flags they were fraudulent.
FINRA, the regulator that supervises stock brokers, permanently barred Cope after a federal judge found that Cope "played a central role in the fraud." The judge ordered Cope, Monas (who has since died) and two others to pay $10 million in restitution and investigative costs and another $10 million in penalties.
Cope threw in a nominal $65,000, but then went more than a decade without making additional payment. In 2013, the SEC hauled him back to federal court in New York to face contempt charges for neglecting repayment.
In the interim, Cope began consulting with businesses that sell so-called penny stocks on over-the-counter exchanges. Eventually, according to the FBI affidavit, he consulted exclusively with de Maison.
Cope was, according to documents filed in the contempt case, living well during his banishment from the securities business:
- When he bought his $1 million home in May 2010, he paid $633,000 in cash and financed a little over $400,000. According to court documents, he told the bank on the loan application that he had assets of more than $2.2 million and his net worth – the amount he has minus debts -- was $1.8 million.
- In September 2010, he filled out another mortgage application that listed his assets as $8.5 million. (Neither loan application, the judge found, disclosed the unpaid IPO judgment to the banks.)
- And in a public show of largess, in 2011, Cope and his wife Stacie pledged $1 million to his alma mater, Kent State, which planned to rename its basketball court "Cope Court."
Cope hastily withdrew the pledge after the student newspaper, the Kent Stater, began investigating his troubled past.
In February 2014, the federal judge found him in contempt of court for failing to pay up in the Pittsburgh IPO fraud case. She threatened to jail Cope if he didn't begin coughing up $10,000 a month.
Cope apparently paid.
The money? The SEC told the judge in the suit it filed this month that the money came straight from the pump-and-dump. |
