Skip to main content

SEC Indicts Three in “Pump-and-Dump” Penny Stock Scheme

By December 10, 2021December 13th, 2021Investment Fraud

The Securities and Exchange Commission (“SEC”) recently announced it had indicted three Canadians in an alleged “pump-and-dump” stock fraud scheme that generated almost $77 million in profits.

According to an SEC news release:

“According to the SEC’s complaint, between at least 2011 and 2016, Canadian citizens Jay Scott Kirk Lee, Geoffrey Allen Wall, and Benjamin Thompson Kirk were some of the more prolific clients of Frederick L. Sharp and his offshore platform, which was essentially a complete service provider for all the illicit needs of those dedicated to committing penny stock fraud.  . . . Through this platform, Lee, Wall, and Kirk, were able to utilize a network of offshore front companies to conceal their control of shares in public companies, unload those shares on unsuspecting retail investors, and disburse to their various bank accounts throughout the world the proceeds of their fraud. They communicated with one another and with Sharp and his associates using encrypted communication devices and an encrypted communications system supplied by the platform, using handles and aliases to hide their behavior. For example, the complaint alleges that in 2013, Lee, Wall, and Kirk surreptitiously gained control of Nutranomics, Inc.’s free-trading stock, directed the distribution of shares of the company to offshore brokerage accounts under the Sharp platform, hired promoters to tout the company’s stock, and then sold their secret large positions on the precipitous price rise, netting millions of dollars.”

“Key to the fraud was maintaining the appearance to the unknowing public that the shares of the public companies were disparately and unrelatedly owned when, in fact, they were under the control of the three defendants working together to dump them. To do this, Lee, Wall and Kirk’s hid their control from brokers and transfer agents who serve as “gatekeepers” to assure that shares controlled by company affiliates (including those who control 5% or more of a company’s shares) are not sold to the public without proper disclosure in a registration statement.”

Fishman Haygood’s Investment Fraud Division has experience bringing claims on behalf of investors who were the victims of fraudulent investment schemes, such as “pump-and-dump” stock schemes.

Please contact us to discuss your possible claim.

GWG Holdings Files for Bankruptcy: How Might That Impact L Bond Investors?