The head of a U.S. stock transfer agency has pled guilty to fraud charges, admitting that he siphoned over US$3 million from investors.

U.S. Attorney for the Eastern District of New York, Loretta Lynch, announced that Frank Speight, the sole owner, officer, and director of International Stock Transfer (IST), pleaded guilty to conspiracy to commit mail fraud and securities fraud. Lynch reports that, according to court filings and facts presented at the plea hearing, Speight stole at least US$3.3 million from investors and used the proceeds to pay personal expenses. He faces up to five years in prison, at least US$3.3 million in restitution, and a fine equal to double the investors’ losses.

Separately, the U.S. Securities and Exchange Commission (SEC) also announced it has charged IST, which has been registered as a transfer agent with the SEC since 2004, and Speight, with defrauding investors “by using aggressive boiler room tactics to peddle worthless securities with promises of high returns or discounted prices.”

The SEC alleges that IST and Speight “abused the transfer agent function by creating and issuing fake securities certificates to both U.S. and international investors. While investors collectively sent in millions of dollars thinking they were purchasing high-yield investments and discounted stock, they ended up receiving counterfeit certificates that Speight and IST fooled them into thinking were legitimate.”

In addition to the guilty plea, they also agreed to settle the SEC’s charges. As a result, Speight will be banned from serving as an officer or director of a public company and from participating in any penny stock offering. The court will determine monetary sanctions at a later date, the SEC notes.