The Securities and Exchange Commission has announced charges against 16 defendants, located in the Bahamas, the British Virgin Islands, Bulgaria, Canada, the Cayman Islands, Monaco, Spain, Turkey, and the United Kingdom, for participating in multi-year fraudulent penny stock schemes that generated more than $194 million in illicit proceeds. The SEC investigations leading to these charges involved assistance from securities regulators and other law enforcement authorities in more than 20 countries and are associated, in part, with parallel criminal actions announced by the United States Attorney’s Office for the Southern District of New York.

“We allege that the defendants in these actions orchestrated some of the most complex microcap stock fraud schemes ever charged by the SEC,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “By locating their operations overseas, using encrypted messaging and operating through a convoluted network of offshore accounts, the defendants hoped to avoid detection of the massive frauds we allege they perpetrated on US markets and investors. However, investigative teams from three SEC offices doggedly kept on their trail, working across borders, and ended this alleged global scheme.”  

The SEC’s complaints, filed in the United States District Court for the Southern District of New York, charge all of the defendants with violating the antifraud and registration provisions of the federal securities laws. The charges, contained in three separate complaints, allege that several defendants played a variety of roles to accumulate the majority of shares in penny stocks via difficult to unveil, offshore nominee companies. It is also alleged that some of the defendants frequently used encrypted text and phone applications to avoid detection by regulators, and arranged to buy and sell penny stocks from multiple offshore accounts, in furtherance of the fraud.

According to the complaints, once some of the defendants had amassed a significant majority of the shares of the stocks, certain defendants secretly funded promotional campaigns to promote the stocks to unsuspecting investors in the United States and elsewhere. As alleged, when those campaigns triggered increases in the demand for and price of the stocks, some of the defendants sold the stocks via trading platforms in Asia, Europe and the Caribbean for significant profits, the SEC said.

The SEC is seeking permanent injunctions, disgorgement of allegedly ill-gotten gains plus interest, and civil penalties against all the defendants; penny stock bars against all the individual defendants; conduct-based injunctions against 11 of the 15 individual defendants; and officer and director bars against eight of the individual defendants. On the emergency applications, the Court issued orders on April 12 and April 15 freezing and directing repatriation of the assets of six defendants.

“The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of New York, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority,” the SEC said.

Defendants (in alphabetical order): Antevorta Capital Partners, Ltd., Craig James Auringer, Ronald Bauer, Domenic Calabrigo, Henry Clarke, Julius Csurgo, Daniel Mark Ferris, Alon Friedlander, Adam Christopher Kambeitz, Curtis Lehner, Petar Dmitrov Mihaylov, Massimiliano Pozzoni, Hasan Sario, Dean Shah, David Sidoo and Courtney Vasseur.

Separately, Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation have announced the unsealing of three indictments charging ten individuals with engaging in a long-running “pump-and-dump” stock manipulation scheme involving the stocks of numerous companies traded on United States-based stock exchanges. 

The scheme spanned the globe and the ten defendants charged were residents of Canada, the United Kingdom, Bulgaria, Spain, Monaco, Turkey and the Bahamas.  RONALD BAUER was arrested in the United Kingdom.  CURTIS WILLIAM LEHNER, COURTNEY VASSEUR, and JULIUS CSURGO were arrested in Canada.  ANTHONY KORCULANIC was arrested in Spain.  PETAR MIHAYLOV was arrested in Bulgaria.  Finally, DOMENIC CALABRIGO was arrested in the Bahamas.  The United States intends to seek the extradition of BAUER, LEHNER, VASSEUR, CSURGO, KORCULANIC, MIHAYLOV, and CALABRIGO to the United States.  CRAIG AURINGER, a citizen of Canada and resident of the United Kingdom, HASAN SARIO, a citizen and resident of Turkey, and DANIEL FERRIS, a citizen of the United Kingdom and resident of Monaco, last known address Columbia Palace, ave Princesse Grace, Monaco, were also charged and remain at large. 

U.S. Attorney Damian Williams said:  “As alleged, for years, the defendants, collectively, made over $100 million by orchestrating ‘pump-and-dump’ stock manipulation schemes of publicly traded shares of U.S.-based issuers.  These pernicious ‘pump-and-dump’ schemes made the defendants rich while causing real harm to ordinary, retail investors who were left swallowing the losses.  These defendants used a web of nominee entities and shell companies located all over the world attempting to disguise their own orchestration of these schemes.  The charges should send a clear message to all of those who think they can make millions running ‘pump-and-dump’ schemes — no matter where in the world you are located, and no matter how many fake accounts and offshore shell companies you try to hide behind, our Office will vigorously pursue and prosecute you.”