Eight people were charged on Thursday in New York with duping thousands of investors into purchasing $290 million worth of penny stocks in "pump and dump" schemes. Three of the people blasted emails "pumping" the stocks to thousands of potential investors, Manhattan District Attorney Cyrus Vance Jr. said in a statement announcing the 85-count indictment.
Others acquired public shell companies, merged new private companies into them and issued shares to themselves and associates in advance of the promotional push, prosecutors said. Once a stock's price was artificially inflated, the schemers "dumped" the stock, leaving public investors with shares that were pretty much worthless, the prosecutors said. Anthony Thompson, 38, of Bethesda, Maryland, and Jay Fung, 40, of Delray Beach, Florida, were arraigned in state Supreme Court in Manhattan in connection with the scheme, which prosecutors said took place between 2009 and 2012. They both pleaded not guilty to securities fraud and other charges.
The pair are accused of promoting the stocks with the help of penny stock websites that prosecutors say they controlled, including OxofWallStreet.com, PennyPic.com and MonsterStox.com. Hanna Schmieder, 39, of New York, and Kenneth Oxsalida, 59, of Sebring, Florida, also were arraigned and pleaded not guilty. Schmieder, the president of Lyric Jeans Inc, and Oxsalida, 59, president of Smart Holdings Inc, are accused of approving new shares in anticipation of the stock manipulation of their companies. The four other people indicted are not yet in custody, prosecutors said. They are: Christopher Balseiro, of North Bay Village, Florida; Eric Van Nguyen, of Quebec; Joseph Dervali, of Pembroke Pines, Florida; and Luz Rodriguez, of Miramar, Florida.
Maranda Fritz, a lawyer for Thompson, said the documents emailed to potential investors clearly stated they were paid advertising. Vance said in a statement that the accused profited "at the expense of the investing public." Other companies involved included Hydrogenetics Inc, Xynergy Holdings Inc, Blast Applications Inc, and Blue Gem Enterprise Inc.
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