A Canadian citizen accused of leading a $140 million fraud scheme involving about a dozen penny stocks was arrested with an associate in Thailand, the U.S. said.
Sandy Winick and Gregory Curry, 63, are expected to face extradition to the U.S. where they have been charged along with seven others accused of participating in the fraud, prosecutors said today in a statement.
Winick, 55, orchestrated the scheme to inflate the value of worthless stocks and market them to investors in about 35 countries, the U.S. said. Winick ran a second scheme in which some of the investors were falsely told they could recoup their losses by paying an “advance fee,” prosecutors said.
“With the help of our friends in Thai law enforcement, we once again showed that fraudsters cannot hide from the law,” Loretta E. Lynch, U.S. attorney in Brooklyn, New York, said in the statement.
The scheme took place from 2008 to July 2013 and involved the creation of phony consulting businesses and law firms, fake press releases about the penny stocks, and call centers that operated in Vietnam, Thailand and Canada, according to the indictment.
Hundreds of the victims live in Brooklyn, Long Island and the New York borough of Queens, and the accused planned to open a Brooklyn call center, prosecutors said.
Stocks included Winick’s holding company Blackout Media Corp. (BKMP), along with Resource Group International (RSGR), Imusic Worldwide Inc., WGI Holdings Inc. (WGIH), Talisman Holdings Inc. (TMHO), Nikron Technologies Inc. (NKRN), Tal-Cap Inc., RainEarth Inc. (RNER), Sync2 Networks Corp., (SYNW) MASS Petroleum (MASP), Liquid Gold International and Foy Johnston Inc. (FOYJ), according to the indictment.
Known as “file cabinet businesses,” the companies had minimal assets, were thinly traded, and were owned or controlled by the defendants, according to prosecutors.
Winick faces charges including conspiracy to commit securities fraud, conspiracy to commit wire fraud, wire fraud, securities fraud and false impersonation of an officer of the U.S. He faces as many as 20 years in prison for each count of conspiracy to commit wire fraud, wire fraud and securities fraud, according to prosecutors.
The criminal case is U.S. v. Winick, 13-cr-00452, U.S. District Court, Eastern District of New York (Brooklyn).
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