Long Terms for Pump and Dump Scheme

(CN) - A Tulsa securities lawyer and a former stockbroker were sentenced to federal prison for their roles in a $43 million pump-and-dump stock scheme. Attorney G. David Gordon, 48, was sentenced to 15 years and 8 months, and former stockbroker Richard Clark, 62, also of Tulsa, got 12 year and 7 months.

U.S. District Judge James Payne also ordered the defendants to forfeit more than $43 million.

A federal jury on May 3 convicted Gordon of conspiracy, wire fraud, securities fraud, money laundering and making a false statement to the SEC.

Clark was convicted of conspiracy, wire fraud, securities fraud and money laundering.

Prosecutors say that from April 2004 to December 2006, Gordon, Clark and other conspirators raked in $43 million by manipulating the three penny stocks - Deep Rock Oil & Gas and Global Beverage Solutions fka Pacific Peak Investments, all of Tulsa, and Glen Ellyn, Ill.-based National Storm Management Group.

Clark is the former CEO of Global Beverage.

"The defendants hid and parked their shares with various nominees, such as friends, relatives or other entities that they owned and controlled," prosecutors said in a statement. "Subsequently, they engaged in coordinated trading in order to create the appearance of an emerging market for these stocks, after which they conducted massive promotional campaigns in which unsolicited fax and e-mail 'blasts' were sent to millions of recipients.

"According to evidence at trial, these blasts touted the respective stocks without accurately disclosing who was paying for the promotions, omitted that the defendants intended to sell their shares, and induced unsuspecting investors to purchase stock in the companies. E-mail and fax blasts promoting two companies, National Storm and Deep Rock Oil & Gas, touted investment opportunities purportedly created by Hurricane Katrina. Evidence at trial showed that the defendants and their nominees obtained significant profits by selling large amounts of shares after they had artificially inflated the stock price. For each of the three manipulated stocks, the defendants' sell-off caused declines of the stock price and left legitimate investors holding stock of significantly reduced value."

Gordon was also convicted of wire fraud and obstruction of justice in connection with a fourth penny stock, International Power Group Ltd., based in New Jersey.

Also charged are Dean Sheptycki, 43, formerly of Florida and the Bahamas; and Dallas-area resident Joshua Wayne Lankford, 36. Both are fugitives. Four other people have pleaded guilty in related cases.

Follow @davejourno

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