DALLAS (CN) – Directors of Homeland Safety International fka Sniffex made $32 million by fraudulently claiming they had a “hand-held bomb detector” that was “a critical breakthrough in the global war against terrorism,” the SEC claims in Federal Court. It claims the directors goosed Sniffex share price from 80 cents to $6 through a pump and dump scheme conducted by email and through the mail.
The SEC claims defendants Petar Mihaylov and Yuri Markov directed the fraud after buying Sniffex as a shell company in 2004 from defendant Mark Lindberg, for $100,000 plus 2 million shares of Sniffex. Lindberg introduced them to defendant Paul Johnson to be Sniffex’s CEO, “who would answer to Mihaylov and Markov,” the complaint states.
They then conducted a sham sale of 15 million shares, the SEC says, and transferred 3.75 million shares to defendants Nicholas Klausgaard, Ilona Klausgaard, of Switzerland.
The fraudulent promotional campaign from May 2005 through April 2006 touted “a purported hand-held bomb detector invented by Markov and also called Sniffex (‘the Sniffex device’), as a critical breakthrough in the global war against terrorism.” The bogus claims made in this promo goosed the share price from 80 cents to $6, “giving the bogus company a market capitalization of $474 million at the scheme’s peak,” the SEC says.
It claims Lindberg dumped 2.1 million shares for a $315,500 profit; Mihaylov dumped 3.7 million shares for $11.3 million; Markov sold 2.8 million shares for $8.6 million; and the Klausgaards sold 3.8 million shares for $12.3 million.