MIAMI (CN) - Led by a recidivist securities violator, seven men defrauded investors of $7 million in a pump-and-dump scheme selling shares of a sham company that claimed it fought global warming, the SEC claims in Federal Court. Federal prosecutors charged six of the men criminally.
Lead defendant Jonathan R. Curshen, "a recidivist securities law violator," led the "fraudulent pump-and-dump scheme in the common stock of C02 Tech Ltd., which the defendants perpetrated through Red Sea Management, Ltd., a Costa Rican asset protection company, from late 2006 through April 2007," according to the complaint.
Curshen "founded and led Red Sea, which effected fraudulent pump-and-dump schemes on behalf of its clients and laundered millions of dollars in illegal trading proceeds out of the United States to its clients overseas," the complaint states.
"Curshen directed Red Sea to open numerous nominee brokerage accounts with U.S. and Canadian broker-dealers to enable the firm to engage in coordinated manipulative trading and conceal its illegal activity. Red Sea's two stock traders, defendants David C. Ricci and Ronny Morales Salazar, had trading authority over and effectively controlled the nominee accounts."
Ricci and Salazar are both named as defendants.
According to the complaint: "Defendants Ariav 'Eric' Weinbaum and Yitzchak (or Izhack) Zigdon were two of Red Sea's clients, who initiated the pump-and-dump of CO2 Tech, a sham company without significant assets or operations whose stock prices were quoted in the Pink Sheets. Weinbaum and Zigdon used the services of defendant Michael S. Krome, an attorney, who issued a fraudulent opinion letter to enable them to have the restrictive legend removed from their C02 Tech stock certificate, giving them nearly full control over the freely tradeable shares ofC02 Tech stock. Weinbaum hired Red Sea to sell massive quantities of C02 Tech stock to the investing public through its web of nominee brokerage accounts. Zigdon caused materially false and misleading information about C02 Tech to be disseminated in press releases and on its website. Weinbaum hired defendant Robert L. Weidenbaum, a stock promoter, to redistribute the false information through websites, spam e-mails and fax blasts. Weidenbaum enlisted a group of stock promoters who then executed illegal 'matched orders' with Red Sea's nominee brokerage accounts in order to 'jump-start' the market and increase the price of the stock.
"Ricci and Salazar placed multiple layered orders to sell C02 Tech stock and thereby created the false appearance that the market for the stock was deeper than it actually was. Weinbaum directed Ricci's and Salazar's sales of the stock. The defendants' coordinated misconduct enabled them to sell the stock at artificially inflated prices, resulting in profits of over $7 million euchred from unsuspecting public investors."
The SEC seeks disgorgement and penalties.
The Justice Department filed criminal charges against Curshen, Krome, Salazar, Weidenbaum, Weinbaum, and Zigdon, accusing them of conspiracy, mail fraud, wire fraud, securities violations and obstruction of justice.
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