The U.S. Securities and Exchange Commission (SEC) Tuesday announced fraud charges against 10 people involved in alleged schemes to trick investors into buying shares of LED lighting profider ForceField Energy Inc.
Several brokers, a stock newsletter publisher and an investor relations professional were all paid to tout ForceField shares by the Florida-based company’s then-chairman, Richard St. Julien, a Canadian who was living in Costa Rica, the SEC alleges.
The alleged perpetrators tried to conceal their involvement by communicating on “burner” phones and using encrypted text messages, the SEC adds.
The allegations have not been proven, and defendants in criminal proceedings are presumed innocent.
“We allege that these men sold investors on the merits of buying ForceField Energy stock while leaving out the most important detail of all: they were being bribed with money and other benefits behind the scenes to tell them that,” says Andrew Calamari, director of the SEC’s New York office, in a statement. “The SEC and its law enforcement partners have pieced together the schemes despite the best efforts of the alleged perpetrators to communicate and distribute cash in clandestine ways.”
The U.S. Attorney’s Office brought criminal charges against St. Julien last year. In a parallel action on Tuesday, it announced criminal charges against the nine other individuals also named in the SEC’s complaint. Those charges include: wire fraud conspiracy; securities fraud conspiracy; money laundering conspiracy; and securities fraud. The scheme ended up costing investors approximately US$131 million in losses, the Federal Bureau of Investigation alleges.
The SEC’s complaint charges all defendants with securities law violations. It is seeking disgorgement plus prejudgment interest, penalties, and permanent injunctions against all defendants as well as penny stock bars and an officer-and-director bar against St. Julien.
“As alleged, the defendants and their network of registered brokers and stock promoters designed an elaborate but fraudulent scheme built on lies, kickbacks and manipulated trading activity to defraud the securities markets, the investing public and their clients,” says Robert Capers, U.S. attorney for the Eastern District of New York.
“They took a company with essentially no business operations and little revenue and deceived the market and their clients into believing it was worth hundreds of millions of dollars through a dizzying round of unauthorized trades and deceptive promotions. In the end, the deceived investors were left holding the empty bag,” Capers adds.