In 3 separate complaints filed by US Securities and Exchange Commission (SEC) in US court, 15 individuals including other Canadians were allegedly involved in a multi-million dollar penny stock schemes that generated more than $194 million in illicit proceeds. However, these are initial complaints, and nothing has been proven in court yet.
A press release issued by US’ Securities and Exchange Commission on April 18, 2022, announced that it has filed complaint in a US court against 15 individuals and one company, located in various countries for participating in multi-year fraudulent penny stock schemes in which the defendants allegedly bought stocks in various companies, artificially inflated their stock prices, and then sold the assets to unsuspecting investors, making millions of dollars in the process.
Penny stock schemes, or ‘pump and dump’ plots, are a form of securities fraud. The perpetrators spread false information on certain stock, thereby creating a buying frenzy which ‘pumps’ up its value. They can then ‘dump’ their own shares at an overinflated price.
“We allege that the defendants in these actions orchestrated some of the most complex microcap stock fraud schemes ever charged by the SEC,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.
The defendants—spread out across the Bahamas, the British Virgin Islands, Bulgaria, Canada, the Cayman Islands, Spain, Turkey, and the U.K. — have been charged for their alleged involvement in a penny stock scheme spanning multiple years.
BC’s businessman David Sidoo’s name was mentioned in one of the 3 complaints filed in the United States District Court for the Southern District of New York.
The release mentions, “The charges, contained in three separate complaints, allege that several defendants played a variety of roles to accumulate the majority of shares in penny stocks via difficult to unveil, offshore nominee companies. It is also alleged that some of the defendants frequently used encrypted text and phone applications to avoid detection by regulators, and arranged to buy and sell penny stocks from multiple offshore accounts, in furtherance of the fraud.”
According to the complaints, once some of the defendants had amassed a significant majority of the shares of the stocks, certain defendants secretly funded promotional campaigns to promote the stocks to unsuspecting investors in the United States and elsewhere. As alleged, when those campaigns triggered increases in the demand for and price of the stocks, some of the defendants sold the stocks via trading platforms in Asia, Europe and the Caribbean for significant profits.”
Sidoo’s name was mentioned with Ronald Bauer, Craig James Auringer, Alon Friedlander, MassimilanoPozzoni, Daniel Mark Ferris, PetarDmitrovMihaylov and Adam Christopher Kambeitz.
According to the complaint, “This case concerns a fraudulent scheme comprising a series of highly profitable “pump-and-dumps” of the stock of at least seventeen publicly-traded companies quoted on U.S. markets.”
The complaint mentions, “David Sidoo, age 62, is a Canadian citizen believed to be residing in Canada. For at least eight years during the 1990s, Sidoo worked as a stockbroker in Vancouver, British Columbia, Canada. As detailed below, he joined in perpetrating at least two Sidoo& Bauer Ring Coalition frauds (North American Oil & Gas Corp. and American Helium Inc.). Like others, Sidoo used offshore omnibus vehicles and front companies to conceal the fact that he was the beneficiary of stock sales, and failed both to disclose his beneficial ownership and trading and to register his stock sales as legally required.”
Investigators also determined that the defendants sent one another encrypted text messages in order to avoid detection from regulators.
“By locating their operations overseas, using encrypted messaging and operating through a convoluted network of offshore accounts, the defendants hoped to avoid detection of the massive frauds we allege they perpetrated on US markets and investors. However, investigative teams from three SEC offices doggedly kept on their trail, working across borders, and ended this alleged global scheme,”said Grewal.
The SEC investigations leading to these charges involved assistance from securities regulators and other law enforcement authorities in more than 20 countries. Canadian securities regulators and other government authorities mentioned in the release were: the Alberta Securities Commission,tQuébec Autorité des Marchés Financiers, the Royal Canadian Mounted Police,he British Columbia Securities Commission.
Various media outlets reported that Sidoo has denied these allegations. Global BC reported, “Through his lawyer, he has denied all allegations related to the SEC complaint. None of the claims have been proven in court.”
