Nice Work if You Can Get it

MANHATTAN (CN) – Two men ran a sophisticated pump and dump scheme that drove the market capitalization of their business to $67.5 million, though it had “virtually no assets or revenues,” the SEC claims in court.
     The scheme was led by Izak Kirk de Maison fka Izak Zirk Engelbrecht and Jason Cope, the SEC says in the lengthy federal complaint.
     They did it through “their control and manipulation of the common stock of Gepco, Ltd., a publicly traded microcap issuer and former public school company,” the SEC says.
     “Equally alarming,” the SEC says in the lawsuit, Cope is using the proceeds of his illegal sales “to make monthly payments to the Commission that this Court ordered him to pay when, earlier this year, it held him in contempt of an over $20 million judgment obtained by the Commission against him and others for another fraud in 2001.”
     Here’s how the latest scam worked, according to the SEC complaint.
     “In the scheme’s first phase, Engelbrecht, who since Gepco’s inception has served as its undisclosed control person, extracted tens of millions of shares of common stock from Gepco for the purpose of conducting two separate, but both illegal, distributions of Gepco-related securities,” the complaint states. “To obtain the shares, Engelbrecht first orchestrated Gepco’s December 2013 reverse merger into Gem Vest, Ltd. (‘Gem Vest’), a private company he created just a few months prior. As a result of the merger, Engelbrecht came to beneficially own 112.5 million (or 75%) of the 150 million shares initially issued by Gepco to Gem Vest’s purported shareholders. Since then, Engelbrecht has caused Gepco, through Malone, the company’s president, chief financial officer, and secretary, to issue more than 38 million additional shares to him and his associates. Engelbrecht is using these shares to conduct his illegal distributions.”
     Along the way, Engelbrecht and his wife, defendant Angelique de Maison, who was Gepco’s chairwoman, “manipulatively traded in Gepco’s common stock in the public market. The purpose of their manipulative trading was twofold: to pump up the stock’s share price so that Engelbrecht’s associates could sell the shares at an inflated price, and to create the illusion of genuine investor demand,” the complaint states. “The manipulation worked: Gepco’s share price rose from $.07 on October 14, 2013, the eve of the announcement of the reverse merger, and the day the pair began their manipulative trading, to a high of $.292 on March 13, 2014 – a more than fourfold increase that resulted in Gepco, a company with virtually no assets or revenues, obtaining a market capitalization of $67,484,120.”

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