Ex-Axius Chief Kaufman Pleads Guilty in Manipulation CaseChris Dolmetsch and Christie Smythe
Former Axius Inc. Chief Executive Officer Roland Kaufman pleaded guilty to one count of conspiracy in a case alleging that he tried to manipulate the price of his company’s stock.
Kaufman, 60, and financial professional Jean-Pierre Neuhaus, both Swiss citizens, were accused of trying to bribe stockbrokers to help artificially inflate the Dubai-based company’s share price. They were caught through a sting operation, according to prosecutors.
“I plead guilty,” Kaufman told U.S. District Judge John Gleeson in Brooklyn, New York. He admitted today to flying to New York from Dubai to give commissions to people he believed to be brokers to induce them to buy stock. He said he wired $13,700 to a company bank account in Brooklyn to cover the commissions. “I did this knowingly and intentionally,” he said.
Gleeson set May 17 for sentencing. Kaufman faces a maximum prison term of five years. The judge said prosecutors estimated a sentence of 63 to 78 months under nonbinding federal guidelines. Prosecutors and the judge said Kaufman would also have to forfeit $298,740, representing the losses to investors.
“He took the crooked path and now faces the prospect of years in prison,” Assistant U.S. Attorney General Lanny Breuer said in a statement. “Although he committed his crimes from outside the United States, U.S. authorities tracked him down, and he has now been held to account.”
Kaufman and his attorney, Eric Snyder, declined to comment after the plea hearing today.
Kaufman and Neuhaus enlisted the help of a person that they thought controlled a network of corrupt U.S. stockbrokers with the authority to trade stocks on behalf of their clients, prosecutors said in a statement.
The pair told the person -- who was actually an undercover law enforcement agent -- to direct the brokers to buy shares of Axius owned or controlled by Kaufman in return for a “secret kickback” of 26 percent to 28 percent of the share price, according to the statement.
Kaufman told the agent that the brokers would have to pay gradually higher prices for the shares and shouldn’t sell the stock for a year in order to maintain the price, according to the statement. The pair agreed to sell about $3.5 million to $5 million worth of Axius shares through the brokers.
The two men were arrested in March 2012. Neuhaus pleaded guilty in October to a conspiracy charge and is scheduled to be sentenced next month. Gleeson told Kaufman he should expect to be deported to his native country when the sentence is completed, although prosecutors said they won’t oppose an application to serve part of his prison time in Switzerland.
Axius is a “development stage company” which “intends to link world cultures and business enterprise together under a common umbrella,” according to a report filed in September with the U.S. Securities and Exchange Commission. In a June 2008 report, the company is described a developer of “wind and solar powered boilers.”
The case is U.S. v. Neuhaus, 12-cr-00439, U.S. District Court, Eastern District of New York (Brooklyn).