A Canadian man has been meted with a prison sentence spanning three and a half years for his involvement in a penny stock fraud scheme that swindled investors out of more than $215 million, according to a statement from the U.S. Attorney's Office for the Central District of California.
The convict, 49-year-old Colin Heatherington of Vancouver, admitted to one count of conspiracy to commit securities fraud and wire fraud on February 1. Heatherington seems to have knowingly participated in the manipulation of penny stock prices, an action which served to fraudulently boost the reported financial status of a group of hedge funds, thereby earning millions in fees while setting the stage for investor losses when the funds finally crumbled.
U.S. District Judge John A. Kronstadt imposed the prison term and also mandated Heatherington to make restitution in the amount of $215,815,031, a financial burden he shares with co-defendant Todd Michael Ficeto, a 57-year-old former Beverly Hills stockbroker, who was convicted by a jury on related felonies. After initially fighting extradition, Heatherington agreed to come to the United States from Canada in 2021.
Within the conspiracy's web, Heatherington worked alongside the elusive financier Florian Wilhelm Jürgen Homm, 64, the founder and chief investment officer of Absolute Funds, currently a runaway from the law. They reportedly engaged in underhanded market maneuvers like cross-trading to artificially bloat stock values and in turn, the net worth of Absolute Funds. They also profited personally through self-dealing trades, in which they sold their own shares of the overvalued penny stocks to the hedge funds they controlled.
Ficeto, serving a six-year sentence handed down after his July 2019 conviction, was found guilty of 18 felonies pertaining to his managerial role. His involvement included allowing Heatherington and others to churn through manipulated penny stocks using his business as a conveyor belt for their scheme, among other acts of fraud. The case was scrutinized by the FBI with assistance from the Department of Justice’s Criminal Division’s Office of International Affairs, IRS Criminal Investigation, the Securities and Exchange Commission, and the Financial Industry Regulatory Authority. The prosecution team consisted of Assistant United States Attorneys from various specialized sections.
More details on Heatherington's trial, plea, and sentence are accessible on the U.S. Attorney's Office website, which documents the judicial proceedings and his ultimate conviction.
