The U.S. Department of Justice has reported the sentencing of Roger Knox, 53, who established a Swiss asset management firm originally known as Silverton, and later called Wintercap. Knox was condemned to serve 36 months in prison. He is also facing forfeiture of $9 million and ordered to provide restitution for instigating a global securities scheme that unlawfully produced approximately $150 million.
"Illegal pump-and-dump schemes inflict financial hardship on numerous innocent investors and impede the integrity of our capital markets." – Acting United States Attorney, Joshua S. Levy.
Knox, along with others, effectively managed Wintercap which sold large portions of microcap securities on behalf of covert control groups. The shares were owned by third parties in less than 5% blocks of the issuer's total value. This tactic allowed them to evade federal disclosure laws and sales limits, thereby enhancing the pump-and-dump schemes Knox was implicated in.
An increased demand for the stocks involved in these schemes was initiated by Knox through promotional campaigns that inflated share prices and trading volumes. The income generated, summing over $137 million from 2016 to 2018, was funneled by Knox to co-conspirators both locally and internationally, leveraging a convoluted money transfer system to disguise the origin and true nature of these funds.
A number of securities such as Environmental Packaging Technologies, Inc. (EPTI), Garmatex Holdings Ltd. (GRMX), OneLife Technologies Corp. (OLMM), and Vitality Biopharma, Inc. (VBIO) traded through Knox’s firm, were part of these illicit schemes. Illicit profits fluctuated between $1.5 million and over $17 million for these specific securities, as per the charges.
Several of Knox's co-conspirators, including Morrie Tobin, Milan Patel, and Matthew Ledvina, have already admitted to their involvement in the EPTI pump-and-dump scheme. However, despite the penalties imposed, this situation highlights a larger ongoing issue of fraudulent financial schemes.
According to Jodi Cohen, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division, Knox’s sentencing sends a clear message, but it cannot compensate for the financial and emotional suffering inflicted on the victims.
