Stock Promoter Gushlak Given Six-Year Prison Term for Price Manipulation

A Canadian-born stock promoter was sentenced by a U.S. judge to six years in prison for manipulating the share price of a communications company where he was a director.

Myron Gushlak was sentenced today by U.S. District Judge Nicholas G. Garaufis in Brooklyn, New York. Gushlak manipulated the stock price of Lombard, Illinois-based GlobalNet Inc. from May 2000 to April 2001, said prosecutors in the office of U.S. Attorney Loretta Lynch. Gushlak was a board member at Global Net during that period.

“Gushlak paid secret kickbacks to brokers in the form of cash and free stock in exchange for the brokers causing their clients to purchase blocks of GlobalNet common stock from Gushlak and others at artificially inflated prices,” prosecutors said in court papers.

Gushlak, who has been living in the Cayman Islands, was taken into custody after his sentencing. He pleaded guilty to conspiracy to commit securities fraud and conspiracy to commit money laundering in 2003. Titan Corp., based in San Diego, bought GlobalNet in 2002. New York-based military contractor L-3 Communications Holdings Inc. bought Titan in 2005.

Alan S. Futerfas of Manhattan, a lawyer for Gushlak, declined to comment after today’s hearing. Assistant U.S. Attorney Daniel A. Spector was the lead prosecutor on the case.

Under Seal

The case has been under seal while Gushlak cooperated with the government in pursuing other people involved in the scheme. Garaufis said Gushlak’s cooperation has been “inconsistent” and that he viewed the secrecy of the case “as a license to continue to deceive those with whom he conducted business.”

Prosecutors accused Gushlak of breaching his cooperation agreement.

Futerfas, Gushlak’s lawyer, said in court today that Gushlak is scheduled to be sentenced in another case in New York state court on Dec. 3 and that German authorities are investigating him as part of the securities-fraud prosecution of Markus Frick, the former host of a German stock-trading TV show “Make Money.”

In 1998, Gushlak started his own merchant banking group called Imperium Capital Inc., according to his website.

The case is U.S. v. Gushlak, 03-cr-833, U.S. District Court, Eastern District of New York (Brooklyn).

To contact the reporter on this story: Thom Weidlich in Brooklyn, New York, federal court at tweidlich@bloomberg.net.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

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