Three CEOs face civil and criminal charges of stock manipulation after regulators said they tried to bribe undercover FBI agents to buy shares of their companies so that the stock prices would rise. One consultant and a marketer who created a website with false testimonials to make a stock more attractive has been charged as well.
Among the allegations described Thursday as AP reported:
Donald Klein , 40, of Frisco, Texas , president and CEO of KCM Holdings Inc. ; and Douglas Newton , 66, or Rancho Mirage, Calif. , CEO of Real American Brands Inc. , both tried to funnel and then conceal kickbacks to the supposed pension plan trustee in exchange for fund’s purchasing millions of shares of their stocks, the SEC said. They also tried to bribe a broker to buy KCM stock for the broker’s clients, the regulator said. Both the broker and the trustee actually were FBI agents.
Thomas Schroepfer , 54, of Las Vegas , president and CEO of SmokeFree Innotec Inc. paid kickbacks to the supposed trustee in exchange for the fund’s buying shares of SmokeFree, the SEC said. SmokeFree stock promoter Charles Fuentes , 66, of Dana Point, Calif. , also was charged.- Brian Gibson , 63, of Coconut Creek, Fla. , created a website called Roaringpennystocks.com to promote shares of Xtreme Motorsports International Inc. , the SEC said. He allegedly promoted the site by sending email blasts to potential investors and posting false testimonials about the success of the website’s stock picks.
The sting was part of a securities and investment fraud initiative in South Florida announced last year by the SEC , FBI , U.S. Attorney and other state and local law-enforcement agencies. In October and December 2010 , the SEC filed civil charges against more than a dozen companies and penny-stock promoters for similar stock manipulation schemes. The U.S. Attorney’s office has obtained 16 criminal convictions related to fraud involving penny stocks.
To be continued..