An Ohio man, previously convicted of a scheme that defrauded investors out of nearly $7 million through stock manipulation, has been sentenced to 17.5 years in prison, the Justice Department reported on its website. Paul Spivak, 66, from Willoughby Hills, was also ordered to pay a $200,000 fine, following his conviction last September on charges including conspiracy to commit securities fraud and wire fraud, with restitution numbers pending.
The case, originating in the U.S. District Court for the Northern District of Ohio, found that Spivak and his co-conspirators had sought to up the ante on the low-value stock of U.S. Lighting Group Inc. (USLG), through price inflation then marketing to investors, this included many elderly individuals who shelled out between $4,000 and $1 million based on the pretense of a savvy investment opportunity as detailed on the Department of Justice website. Alongside Spivak, co-defendant Charles Scott, 70, from Alexandria, Virginia, was also convicted and later sentenced to over three years in prison and fined half a million dollars.
From 2016 through 2019, Spivak's operation involved drawing investors into purchasing USLG's "penny" stocks at supposedly discounted rates, convincing them they have struck an advantageous deal; in reality, the prices were artificially inflated and the result of a reverse merger with a shell company as the U.S. Attorney’s Office reported. Spivak's team, using aliases as unlicensed brokers, monetized on the situation by profiting off large, secretive commissions, camouflaged as consulting service payments.
As the scheme began unraveling, investigative efforts disclosed the extent of Spivak's maneuvering, which included plans to establish a boiler room out of the country and attempt to throw off the scent of regulators; Spivak, undeterred, even sought to undermine the investigation upon arrest, as he was caught on phone calls directing his spouse to contact FBI agents with a bribe to make this thing go away, and contemplating a lawsuit against the FBI, with records of these conversations part of the evidence used against him.
Other participants in Spivak’s conspiracy have faced their reckonings, with pleas of guilty for related fraud charges, and several have already been sentenced. Others are slated for their respective dates with justice later this month, as further sentencing is scheduled for April 29 and 30, according to the Justice Department’s announcement.
