Vous êtes sur la page 1sur 6

André Birotte Jr.

NEWS United States Attorney


RELEASE Central District of California

Thom Mrozek, Public Affairs Officer


For Immediate Distribution (213) 894-6947
thom.mrozek@usdoj.gov
February 14, 2013 www.justice.gov/usao/cac

14 Arrested For Market Manipulation Schemes that Caused


Thousands of Investors to Lose More Than $30 Million

Two Federal Indictments Charge 15 Defendants in Plots that Fraudulently Inflated


Stock Values and Laundered Profits through Offshore Accounts

LOS ANGELES – Federal authorities have arrested 14 people named in two


federal indictments that allege long-term schemes to manipulate stock prices that led to
more than 20,000 investors losing over $30 million when artificially inflated stock prices
collapsed. As one defendant described his scheme during a wiretapped phone call:
“What I do is turn stock into money.”
The arrests were made yesterday pursuant to two grand jury indictments that
were unsealed yesterday. The indictments detail two separate, large-scale fraud
schemes in which conspirators:
• gained control of the majority of the stock of publicly traded companies, often co-
opting company management to assist in these efforts;
• concealed their control of the stock by purchasing and transferring shares to
offshore accounts and to nominee entities with names such as “Dojo,” “Picasso,”
and “Big Dog”;
• fraudulently inflated the prices and trading volumes of the companies’ stocks
through slick marketing campaigns, misleading press releases, payments to
stock promoters, and “cross-trading” among co-conspirators that made it appear
the stocks were being actively traded;
• coordinated the sale of the companies’ shares at the peak of the fraudulently
manipulated market; and
• hid profits in nominee and offshore accounts.
According to court documents, the defendants are serial market manipulators
who carried out several fraudulent deals each year, each of which generated several
million dollars. The defendants generally targeted marginal companies operating in
areas they believed could easily be touted as generating breakthroughs or deals that
would explain sudden increases in trading volume and price, including companies
purportedly involved in pharmaceuticals, hair restoration, green technologies,
entertainment, oil and gas development, and e-commerce websites. The indictments
allege that increased trading volume and higher stock prices were actually the result of
the defendants’ fraudulent actions. A company CEO brought into one of the schemes
summed up a typical deal during a wiretapped call: “There's nothing in there, there’s
nothing to the company. It’s monkey business.”
The indictments allege that the schemes collectively engaged in five specific
deals that defrauded more than 20,000 investors around the world and generated more
than $30 million in illegal profits.
“This case has dismantled a far-reaching stock market manipulation scheme run
with ruthless efficiency and operated with one goal in mind – to steal money from the
investing public,” said United States Attorney André Birotte Jr. “This type of predatory
behavior cheats the average investor, erodes overall confidence in the markets, and
has a devastating impact on companies and their employees.”
One indictment alleges a scheme led by Sherman Mazur and his nephew, Ari
Kaplan, charging that they “perpetrated a multimillion-dollar scheme to fraudulently
inflate the prices and trading volumes of public company stocks and then sell millions of
shares of those companies at the fraudulently inflated prices to the investing public for
substantial profits.” The indictment alleges that the scheme involved a number of
companies, but focuses on deals involving two businesses – GenMed, which purported
to develop, manufacture and distribute generic pharmaceuticals; and Biostem, which
purported to develop and license regenerative stem cell treatments, including hair
regrowth technology.
The 32-count Mazur indictment charges nine defendants, all of whom were taken
into custody yesterday morning. They are:
• Sherman Mazur, 63, of the Westwood district of Los Angeles, who controlled a
company called the London Finance Group, Ltd.;
• Ari Kaplan, 40 of Venice, who is Mazur’s nephew and was his partner in the
London Finance Group, as well as in a series of other business endeavors;
• Grover Henry Colin Nix IV (who generally used the name “Colin Nix”), 39, of the
Los Feliz district of Los Angeles, who controlled the Santa Monica-based
Calbridge Capital, LLC, which purported to be a “boutique investment banking
firm”;
• Regis Possino, 65, of the Pacific Palisades district of Los Angeles, a now-
disbarred attorney who was Nix’s partner at Calbridge Capital;
• Edon Moyal, 32, of Carlsbad, California, who controlled a company called 8
Sounds, Inc. and while allegedly involved in this scheme was free on bond
pending trial in a criminal case filed in federal court in San Diego;
• Mark Harris, 56, of Scottsdale, Arizona, a stock promoter who controlled Apache
Capital, LLC, an investor relations firm in Scottsdale, Arizona;
• Joey Davis, 46, of the Los Feliz district of Los Angeles, who controlled Scripted
Consulting Group, a public relations firm in Los Angeles, and who was allegedly
involved in this scheme while free on bond pending trial in a criminal case filed in
federal court in Los Angeles;
• Curtis Platt, who turned 51 today, of Sarasota, Florida, who controlled Big Dog
International, LLC; and
• Dwight Brunoehler, 62, of Maitland, Florida, who is the CEO of Biostem, a
company based in Clearwater, Florida.
The Mazur indictment alleges that the nine defendants conspired to commit
securities fraud and wire fraud. The indictment alleges that members of the scheme
generated at least $13 million in illegal proceeds when they sold their shares of
manipulated companies, a figure that includes at least $2.1 million in illegal proceeds
from the manipulation campaign for Genmed, as well as $500,000 in illegal proceeds
from the ongoing manipulation campaign for Biostem. The indictment further alleges
that Mazur, Kaplan, Nix, Possino and Harris engaged in money laundering, using funds
transferred from offshore accounts to promote their fraudulent scheme.
“The defendants’ alleged combination of celebrities, press releases, gimmicks
and lies was similar to a how a magician deceives unsuspecting believers into an
illusion,” said Bill Lewis, Assistant Director in Charge of the FBI’s Los Angeles Field
Office. “While operating the schemes alleged in the indictments, the defendants kept
their audience captive until stock prices peaked, while investor money vanished into
defendants bank accounts.”
The second indictment concerns a stock manipulation ring allegedly headed by
Possino – a former Los Angeles County deputy district attorney – and Nix, both of
whom are also key players in the Mazur indictment. This second indictment also
outlines a broad scheme to manipulate stock prices, and it focuses on deals involving
three companies – Sport Endurance, Inc., which purported to develop, manufacture,
and distribute energy drinks and nutritional supplements; Imobolis, Inc., which came to
be known as FrogAds and which purported to operate an online bulletin board for
classified advertisements; and Empire Post Media, which purported to provide media
services, including post-production services, for feature films and television programs.
This 37-count indictment charges 11 defendants, some of whom are also charged in
the Mazur indictment. Those named in the second indictment are:
! Regis Possino, who along with Nix, controlled a series of companies used in
relation to the stock manipulation scheme;
! Grover Henry Colin Nix IV, who was generally known as Colin Nix;
! Tarun Mendiratta, 42, of Weston, Connecticut, who claimed to have earned
between $75 million and $80 from market manipulation schemes over the past
decade, and who allegedly participated in the current scheme, in part, by using a
cell phone smuggled into the prison where he was housed;
! Ivano Angelastri, 49, a resident of Switzerland and Dubai, who controlled funds
and securities in foreign accounts for himself and Mendiratta (Angelastri is the
one defendants who was not arrested yesterday; he is currently being sought by
authorities);
! Mark Harris, the Arizona-based stock promoter;
! Edon Moyal; the San Diego County man;
! Joseph Scarpello, 52, of Tustin, California, a disbarred attorney who controlled
Taylor Financial, Ltd.;
! Julian Spitari, 47, of Encino, California, who was the CEO of the company that
came to be called FrogAds;
! Peter Dunn, 72, of the Brentwood district of Los Angeles, who was the CEO of
Empire Post Media;
! William Mackey, 61, a stock promoter who resides in Plantation, Florida, who
allegedly was free on bond in a federal case filed in Manhattan when he
committed the crimes alleged in this indictment; and
! Joseph Davis, the PR executive.
The Possino indictment alleges that members of the conspiracy made at least
$18 million in illegal proceeds from selling their shares of manipulated companies. This
figure includes at least $1 million in profits from the Sport Endurance campaign, at least
$6.8 million from the FrogAds deal, and at least $1 million in profits from the Empire
Post Media deal. The defendants named in this indictment are charged with conspiracy
to commit securities fraud and wire fraud. Possino, Nix, Mendiratta, Angelastri, Harris,
Moyal, Scarpello and Spitari are also charged with money laundering related to funds
transferred from offshore accounts.
“This investigation took law enforcement above and beyond its traditional role in
financial crimes,” said N. Dawn Mertz, Special Agent in Charge of IRS Criminal
Investigation’s Los Angeles Field Office. “Using foreign bank accounts to promote their
scheme, the case put us square in the middle of the world of international banking and
the sophisticated electronic movement of money. IRS Criminal Investigation is proud to
bring our accounting skills to this joint venture and to put a stop to this and other types
of white-collar fraud.”
While the two indictments outline conspiracies to engage in wide-ranging market
manipulation, each focuses on a small number of deals that illustrate the overall
schemes. One deal concerns the alleged manipulation of FrogAds stock. After buying
up all of the company’s stock just over a year ago, members of the conspiracy arranged
for FrogAds to issue a series of press releases touting the company’s successes and
growth potential, which included making bogus claims that the FrogAds website was
among the most visited on the Internet. At the same time, several online stock pickers
and at least one analyst recommended FrogAds after being paid by some of the
defendants. After the company held a press conference with a well known actress (who
was not part of the conspiracy) announcing that she would serve as FrogAds’ celebrity
spokeswoman, and while members of the conspiracy cross-traded stock to give the
false appearance of increased market demand, the price for FrogAds stock went up.
But the purported success of FrogAds and the apparent interest in the company’s stock
were an elaborate fabrication. The indictment quotes one member of the conspiracy
saying in a recorded phone call: “You’re dressing this thing up as a multimillion dollar
deal, you gotta make sure that we have all our ducks in order.” The manipulation of
FrogAds’ stock allegedly orchestrated by the conspiracy resulted in profits of nearly $7
million for the defendants.
The defendants arrested yesterday morning – all of the charged defendants
except Angelastri – made their initial appearances in federal courts in the districts
where they were arrested. Mazur and Possino, both of whom entered not guilty pleas to
the charges in their indictments, are currently being held without bond, but they are
scheduled to have detention hearings next week in United States District Court. Trial
dates for both cases were scheduled for April 9 in federal court in Los Angeles.
An indictment contains allegations that a defendant has committed a crime.
Every defendant is presumed innocent until and unless proven guilty.
If convicted, each of the defendants would face statutory maximum penalties of
at least 100 years in federal prison. Some of the defendants, including Mazur, Possino,
Nix, and Mendiratta face potential life sentences.
Yesterday’s arrests were made pursuant to two indictments unsealed today that
are the result of ongoing investigations being conducted by the Federal Bureau of
Investigation and IRS Criminal Investigation. The investigation involved a series of
wiretaps that resulted in the interception of more than 60,000 phone calls and 24,000
text messages.

Release No. 13-024

Vous aimerez peut-être aussi