Six in court in the US over US$140m penny stocks fraud
Six appear in court in the US over what is said to be one of the largest 'penny stock' swindles ever investigated, affecting about 35 countries
Six people have appeared in US federal courts in connection with what officials are calling one of the biggest international penny stock frauds ever investigated.
They were among nine Canadians and Americans - two of them expats in Thailand - indicted on charges of milking investors in about 35 countries of more than US$140 million.
A seventh suspect was arrested in Ontario, Canada, while two others remain at large.
The US Attorney's Office said: "The indictment and arrests are the result of one of the largest international penny stock investigations ever conducted by the Department of Justice and the Federal Bureau of Investigation."
According to the indictment, the defendants fraudulently "pumped up" the share price of worthless penny stocks and then dumped billions of shares by unloading them on unsuspecting investors worldwide.
Along with the "pump and dump" scam, they also allegedly operated "boiler room" call centres in at least four countries.
From the centres, they induced penny-stock investors to pay advance fees which the defendants promised would enable them to sell their stocks and recover losses. In fact, the fees were stolen. "Hitting the Americans would be like taking money from a baby," one of the defendants was heard saying in an FBI wiretap.
US Attorney Loretta Lynch said the defendants "used our securities markets as a platform from which to run elaborate fraudulent schemes to victimise unsuspecting investors".
She added: "Where others saw citizens of the world, the defendants saw a pool of potential marks."
The charges against the nine defendants include 24 counts of securities fraud, wire fraud and false personation of Internal Revenue Service employees.
The operation was allegedly orchestrated by Sandy Winick, 55, a Canadian who has lived in China, Thailand, Vietnam and the US. Winick remains at large and is thought to be in Thailand.
Others charged include Joseph Manfredonia, 45, who used phoney press releases to promote the penny stocks and recruited others to manipulate their prices and trading volumes.
Cort Poyner, 44, bribed brokers to purchase the penny stocks on behalf of their clients, according to the indictment.
He was also intercepted on a wire communication reminding others involved in the scheme to use mobile "throwaway phones" to avoid being caught.
Gregory Curry and his son, Kolt Curry, Canadians who also lived at various times in Thailand, managed call centres around the world, including in Canada, Thailand and the UK, and were planning to open a call centre in Brooklyn, said the statement.
They also prepared false letters, websites and e-mail accounts to deceive investors.
Gregory Curry, 63, along with Winick, remains at large. Winick has been in trouble in the past.
In 2010, the US Securities and Exchange Commission won a default judgment against him after he failed to respond to a complaint accusing him of creating dozens of shell companies under a public company he controlled known as Blackout Media.
The SEC accused Winick of creating 59 subsidiaries in Blackout with no legitimate business purpose except to sell unregistered shares in the companies and pocketing the proceeds.
Last year he was ordered to disgorge US$3.2 million in ill-gotten gains and was barred from the penny stock market.