A group of five have been slapped with indictments for their roles in a slew of pump-and-dump schemes, according to the U.S. Attorney's Office in Boston. The alleged fraudsters, including four Canadians and a former Cali lawyer believed to be in Mexico, supposedly made off with at least tens of millions of dollars by playing the penny stock market like a fiddle.
Frederick L. Sharp, age 71, and Courtney M. Kelln, age 43, both hailing from British Columbia, are facing a pair of securities fraud and conspiracy raps. The indictment also puts Luis Carrillo, age 50, previously of California, and Canucks Mike K.G. Veldhuis, age 43, and Paul Sexton, age 55, on the hook for similar charges, all previously named in criminal complaints. Roger Knox, mastermind behind the Swiss firm Wintercap SA and already sentenced last October, is among the accused co-conspirators, the Justice Department said.
Charging docs reveal the pump-and-dump game plan: inflate a stock ("the pump"), then sell the shares high or to a more liquid market ("the dump"). Sharp, codenamed "Bond," allegedly ran an operation providing services for clients to sell penny stocks anonymously. This setup included offshore entities for holding shares, encrypted comm networks, and a web-based system that tracked stocks and proceeds, known to insiders as "Q".
Kelln apparently handled the share breakdown and transfers for Sharp's clients, moving the stock to offshore nominees and ultimately depositing them with Wintercap for sale. It's alleged that Carrillo, Veldhuis and Sexton were the puppeteers behind the schemes, using Sharp's setup and Wintercap to dump shares during aggressive promo campaigns, sometimes featuring boiler rooms cold-calling investors with the hard sell. They maneuvered blocks of shares, stayed under the radar of brokers, and failed to make necessary public filings, according to the indictment.
Some schemes chalked up major bucks: OneLife Technologies Corp. (ticker OLMM) saw around $5.2 million in sales between November 2017 and October 2018, Garmatex Holdings, Ltd. (ticker GRMX) pulled in about $5 million in just a couple of months in 2017, and Pure Snax International, Inc. (ticker PSNX) was tied to approximately $1.6 million in sales from November 2015 to September 2016. Veldhuis and Sexton's own starring role with Vitality BioPharma, Inc., also netted over $17 million from May 2016 to September 2018, officials allege.
These defendants could be looking at up to two decades in the clink for securities fraud, not to mention fines that could hit $5 million. For conspiracy, the cap is a five-year sentence and fines up to $250,000 or double the ill-gotten wealth, whichever goes higher. But let's remember, these charges are just that – charges. These five will remain in the innocent column until proven otherwise in the eyes of the law.
