Stock Scam Alert

South Florida scams busted: Ponzis, pump ‘n’ dumps, Forex

South Florida Business Journal by Paul Brinkmann, Reporter

Date: Monday, June 4, 2012, 5:11pm EDT


A concerted attack on investment fraud in South Florida over the past three years has netted 85 people busted and more than $1.5 billion in restitution ordered.

Federal and state authorities announced the results Monday, along with a list of 12 new cases that included Clean Coal Technologies.

Clean Coal’s president, Douglas Hague, 65, of Boca Raton, was charged Monday along with 15 other new defendants.

The charges allege that Hague paid kickbacks to a third party with the purpose of pumping up the stock price for Clean Coal Technologies (OTC: CCTC). The company purportedly converted low-grade coal to high-grade clean-burning coal. But the charges allege that Hague paid kickbacks to the manager of a pension fund to buy stock at inflated prices.

The federal district for South Florida ranks second in the nation in securities and investment fraud investigations and prosecutions.

According to the news release from the U.S. Attorney’s office, other new cases included:

Cleland Ayison, 32, of Tampa, arrested Monday on charges of possessing a fraudulent $500 million Federal Reserve Note.

Michael Cimino and Joseph Repko: Cimino, 59, of Philadelphia, Penn., the director and chairman of the board for Sure Trace Security Corporation (SSTY), and Repko, 63, of Hobe Sound, SSTY’s chief financial officer and president, were arrested Monday on charges of conspiring to commit mail fraud by paying kickbacks to a pension fund fiduciary for buying stock at inflated prices. SSTY, a Utah corporation, was purportedly involved in the anti-counterfeiting technology business.

Ryan Coblin, 41, of Boca Raton, president of Delivery Technology Solutions, a delivery company. Coblin was charged in September and pleaded guilty March 8 to engaging in a scheme to pay kickbacks to a hedge fund fiduciary in a stock scheme. Sentencing is scheduled for July 13.

Scott Haire, 42, of Coral Springs, was president of Wound Management Technologies, Inc. (WNDM), a Texas corporation that purportedly developed advanced wound care products. Haire was charged with engaging in a scheme to manipulate the publicly quoted share price and trading volume of WNDM common stock. Haire is expected to surrender on June 6.

According to the news release, authorities arrested several other people from other states who held meetings in South Florida to further their stock schemes.

Ponzi Schemes

Juan Carlos Rodriguez, 49, of Miami, indicted March 6 for alleged wire fraud in the execution of a Ponzi scheme. According to the indictment, Rodriguez was the sole officer and director of MDN Financial Group, a Miami company that solicited approximately $5.2 million from investors with promises that the company would invest in stocks, bonds, and precious metals. Rodriguez would recruit colleagues and friends to invest in MDN Financial, promising them 20 to 50 percent returns. He used more than $1 million of the money to pay for personal expenses like credit card bills.

George Elia, 68, formerly of Fort Lauderdale, scheduled to be arraigned June 6 on charges of operating a Ponzi scheme in which he recruited investors by making false claims about the potential returns on investments. Elia was the president of Fort Lauderdale-based International Consultants & Investment Group, LC. The Business Journal previously wrote about the alleged fraud.

Aner Menendez, arrested Monday on charges of mail fraud and wire fraud. As the sole member of Key Biscayne-based De Forcade LLC, he recruited investors claiming he was a skilled foreign currencies trader (foreign exchange or For-ex). He exploited social relationships to convince his victims to invest savings with him, but spent the money on himself and friends.

The SEC also said it filed nine separate civil injunctive actions against 12 individuals and eight microcap companies, charging them with violations of the antifraud provisions of the federal securities laws and seeking, among other relief, permanent injunctions, disgorgement and financial penalties.

Led by U.S. Attorney Wifredo Ferrer, the initiative includes the U.S. Securities and Exchange Commission and the state’s Office of Financial Regulation. Other cooperating agencies include the IRS, FDIC and FTC.

Ferrer said in a news release, “Too often, we hear from victims who have lost their entire lives’ savings or their retirement nest egg to one of these unscrupulous schemers. Today, we hope to educate the public about the need to be alert and to verify before trusting and investing. If something sounds too good to be true, it usually isn’t.”

Penny Stock Scams (South Florida Business Journal)

SEC targets 379 shell companies in fraud-fighting initiative


South Florida Business Journal
Date: Monday, May 14, 2012, 2:44pm EDT


The Securities and Exchange Commission on Monday suspended trading in the securities of 379 dormant companies before they could be hijacked by fraudsters and used to harm investors through reverse mergers or pump-and-dump schemes, the agency said in a press release.

The trading suspension marks the most companies ever suspended in a single day by the agency as it ramps up its crackdown against fraud involving microcap shell companies that are dormant and delinquent in their public disclosures.

South Florida has traditionally been one of the nation's hotbeds when it comes to microcap shell companies, which are often touted via investment newsletters and telephone sales operations. The SEC has a link to a list of the companies whose trading has been suspended, but the list did not have a breakdown of where the companies are located.

Earlier this month, the SEC suspended the trading of two companies based in Fort Lauderdale and Miami, saying there was an attempt to manipulated the market. In April, FBI Director Robert Mueller in a Miami speech said corporate and securities fraud were a big problem for South Florida's business community.

In a pump-and-dump, perpetrators will tout a thinly-traded microcap stock through false and misleading statements about the company, the SEC said. After purchasing shares for a low price and pumping the stock price higher by creating the appearance of market activity, they dump the stock to make huge profits by selling it into the market at the higher price.

While the price gains are often less than a dollar per share, the schemes can generate millions in revenue through dramatic percentage increases in share prices.

"Empty shell companies are to stock manipulators and pump-and-dump schemers what guns are to bank robbers — the tools by which they ply their illegal trade," said Robert Khuzami, director of the SEC's Division of Enforcement. "This massive trading suspension unmasks these empty shell companies and deprives unscrupulous scam artists of the opportunity to profit at the expense of unsuspecting retail investors."

Stock manipulators will pay as much as $750,000 to assume control of a shell company in order to pump and dump the stock for illegal proceeds to the detriment of investors, the SEC said. But with this trading suspension's obligation to provide updated financial information, these shell companies have been rendered essentially worthless for scam artists.

An initiative tabbed Operation Shell-Expel by the SEC's Microcap Fraud Working Group utilized various agency resources including the enhanced intelligence technology of the Enforcement Division's Office of Market Intelligence to scrutinize microcap stocks in the markets nationwide and identify clearly dormant shell companies in 32 states and six foreign countries that were ripe for potential fraud, the SEC said.

The SEC's previously largest trading suspension was an order in September 2005 that involved 39 companies. The federal securities laws allow the SEC to suspend trading in any stock for up to 10 business days. Subject to certain exceptions and exemptions, once a company is suspended from trading, it cannot be quoted again until it provides updated information including accurate financial statements.