U.S. regulators announced charges against a pair of Canadians today, alleging that they orchestrated a US$17 million pump-and-dump scheme in a microcap coal company.
The U.S. Securities and Exchange Commission (SEC) brought charges today against two Canadians, Bruce Strebinger and Brent Chapman (who was formerly registered as an investment advisor in Canada), alleging that they funded a multi-million dollar promotional campaign to hype the stock of a U.S.-based microcap company, while simultaneously dumping their shares in the firm, and routing the proceeds through offshore accounts. The allegations have not been proven.
The SEC says that Strebinger facilitated a reverse merger between shell company, Americas Energy Company-AECo, and a private start-up; and that they each acquired substantial positions of the company without publicly disclosing their ownership stake as required under the federal securities laws. The regulator alleges that they then orchestrated an aggressive campaign to promote Americas Energy stock to prospective investors through e-mails and direct mailings of stock promotion reports that contained false and misleading statements.
The SEC’s complaint, which was filed in U.S. District Court for the Northern District of Georgia, also claims that, as the promotional scheme was driving up the company’s share price, Strebinger and Chapman “were secretly selling their shares through an intricate web of offshore corporations, foreign accounts, and financial institutions located in Canada, Nevis, Panama, Switzerland, and the Turks and Caicos Islands.” It alleges that they generated proceeds of more than US$17 million through their scheme.
“Strebinger and Chapman rigged a penny stock in their favor while staging a massive promotional campaign,” said William Hicks, associate director for enforcement in the SEC’s Atlanta office. “They disguised their scheme by dumping their shares in relatively small amounts over extended periods of time, and they attempted to hide their proceeds from U.S. regulators by routing them through offshore accounts.”
The SEC’s complaint seeks permanent injunctions, disgorgement of ill-gotten gains along with prejudgment interest, financial penalties, penny stock bars, an accounting, and the repatriation of any stock sales proceeds transferred to any offshore sites.
The SEC has also named Strebinger’s wife as a relief defendant in its complaint as part of its effort to seek disgorgement of ill-gotten gains from the scheme. A couple of companies they own, Muskateer Investments Inc., Furla Blue SpA, and Lance Investments S.A. are also named as relief defendants.
The SEC says its investigation is continuing.