A man convicted for participating in the biggest fraud in British Columbia’s history is facing new charges from the U.S. Securities and Exchange Commission (SEC) involving an alleged boiler room scheme.
The SEC charged three individuals, including three Canadians, with fraud for allegedly operating a boiler room out of Medellin, Colombia that engaged in pump and dump schemes involving over-the-counter penny stocks.
Among the Canadians charged in the scheme is Francis Biller, who pled guilty to four counts of theft and fraud in B.C. back in 2005. At that time, Biller was sentenced to three years in prison, in connection with the failure of Eron Mortgage Corp. which saw investors lose an estimated $170 million.
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Following his criminal conviction, Biller was also permanently banned by the Ontario Securities Commission (OSC) that same year. In 2000, the B.C. Securities Commission banned him for 10 years and ordered a $300,000 monetary penalty against him.
Now, Biller – alongside four others – has been charged by the SEC. The others are two Canadians – Raymond Dove and Troy Gran-Brooks – plus a U.S. citizen, Chester Alvarez, and a Dutch man, Justin Plaizier. The SEC alleges they “operated call centers, set up as phony investment management firms, with fake names, websites, and phone numbers.”
The U.S. regulator alleged that they used false personas to orchestrate a pump-and-dump scheme that targeted U.S. and Canadian investors involving at least 18 issuers, and that generated more than US$58 million in trading profits. It also alleged the they were paid approximately US$10 million to mislead investors into buying thinly-traded stocks.
According to the SEC’s complaint, the scheme was exposed by an undercover informant who “purported to be looking for a boiler room to promote several issuers’ stocks,” but was actually working with law enforcement officials and secretly recorded his conversations and meetings with the defendants.
“These scam artists went to great lengths — using bogus companies, aliases, and spoofing their phone numbers — to defraud and mislead investors into a pump-and-dump scheme,” said Paul Levenson, director of the SEC’s Boston office, in a release.
The SEC’s complaint was filed in the U.S. District Court for the Eastern District of New York. The SEC charges all of the defendants with violating the antifraud provisions of securities laws, and charges Alvarez with market manipulation. It seeks disgorgement plus prejudgment interest, civil penalties, and market bans.
None of the allegations have been proven.