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Thursday, April 11, 2024 | Back issues
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SoCal Attorneys Accused|in $12 Million Pump & Dump

MANHATTAN (CN) - Two San Diego attorneys helped international fraudsters make $12 million in a pump-and-dump stock scheme, the SEC claims in Federal Court.

The SEC sued 10 people and four businesses in its 50-page complaint.

San Diego lawyers Luis J. Carrillo and Wade D. Huettel, both 39, and their law office, Carrillo Huettel LLP, are the lead defendants.

They are accused of helping four Canadian ringleaders pump and dump shares of Tradeshow Marketing and Pacific Blue Energy.

The lawyers, and one lawyer's dad, made at least $1 million from it, and the Canadian scalpers at least $11 million, the SEC says in its complaint.

"The action arises out of a fraudulent 'pump-and-dump' scheme involving two publicly traded U.S.-based companies: Tradeshow and Pacific Blue," the complaint states. "The primary goal of the scheme was to enrich certain stock promoters by 'pumping' up trading in the stock of Tradeshow and Pacific Blue with false and misleading promotions, purportedly based on 'independent' research, and then secretly 'dumping,' i.e., liquidating the promoters' shares into the artificially inflated demand they created.

"Tradeshow and Pacific Blue were controlled by a group of Canadian stock promoters: [defendants] John Kirk, Ben Kirk, Dylan Boyle and James Hinton. The Kirks, Boyle and Hinton secretly took control of the companies and then 'pumped' those companies' stock price by sending investors false and misleading email blasts from two stock-touting websites they controlled-Skymark Research and Emerging Stock Report. They also hired a 'boiler room' of individuals who called U.S. investors to tout the stocks, falsely claiming they were providing independent research.

"U.S.-based attorneys [defendants] Luis Carrillo and Wade Huettel were central participants in the scheme. Under the guise of providing legal services, they helped the promoters acquire the Pacific Blue shell, drafted Pacific Blue's misleading public filings, provided misleading legal opinions, and allowed the promoters to funnel sales proceeds through their firm's attorney-client trust account. Carrillo and Huettel also helped the Kirks and Boyle mask their ownership and control of Pacific Blue by transferring blocks of shares through a complex web of dozen of offshore nominee entries.

"Carrillo and Huettel also received proceeds from sales of Pacific Blue stock that they arranged to be transferred to Carrillo's father, Dr. [Luis] Carrillo. The Pacific Blue shares held in Dr. Carrillo's name were liquidated for over $1 million in proceeds at the height of the pump, of which over $300,000 was transferred to Carrillo and Huettel, partially as a sham 'loan' to Carrillo and Huettel, LLP.

"The Kirks, Boyle and Hinton made at least $11 million by 'scalping,' i.e., by secretly selling Pacific Blue and Tradeshow shares while simultaneously promoting the stocks and encouraging others to buy. They sold these shares, in part, through accounts at [defendant] Gibraltar [Global Securities] in the Bahamas and a broker-dealer in Turks and Caicos. By doing so, contrary to their recommendations to other investors, their recommendations were misleading and fraudulent."

Defendant Luniel De Beer, president of Tradeshow and chairman of Pacific Blue, got $330,000 in kickbacks for his false representations and concealing the promoters' control of the two companies, the SEC says.

"In August 2011, the Alberta Securities Commission (the 'ASC') issued an interim cease trade order against Skymark and its representative, putting a halt to Skymark's fraudulent promotion," the SEC says in the complaint. "The ASC subsequently filed quasi-criminal charges in the Provincial Court of Alberta against John Kirk, Ben Kirk and Boyle in connection with the pump-and-dump schemes, for which a trial is currently scheduled for June 2013."

Here are the defendants, and the SEC's description of them:

Carrillo Huettel LLP, "a San Diego, California law firm purporting to specialize in securities and reverse mergers." It formerly was known as SteadyLaw Group. "The firm is currently winding down."

Luis J. Carrillo, and Wade D. Huettel, both controlling attorneys of Carrillo Huettel and its predecessor;

Gibraltar Global Securities, of the Bahamas. The British Columbia Securities Exchange Commission issued a cease and desist order against it in May 2012. "Gibraltar recently announced it is terminating its business."

Warren Davis, 38, of the Bahamas, president of Gibraltar;

John B. Kirk, 40, of Surrey, B.C., "was sole director of Skymark Media Group Ltd., and controlled Emerging Stock Report."

Benjamin T. Kirk, 34, formerly of Calgary, Alberta, "fled Canada in 2010 or 2011." He was indicted in Philadelphia Federal Court in 2008 in another stock-manipulation scheme. He failed to appear and a warrant was issued for his arrest;

Dylan L. Boyle, 34, of Calgary, Alberta, a principal of Skymark Research;

James K. Hinton Jr., 42, of White Rock, B.C., who worked out of a Skymark office in Calgary;

Luniel De Beer, 41, of Sammamish, Wash.;

Joel P. Franklin, 39, of North Carolina but during the relevant period of Anthem, Ariz., president and CEO of Pacific Blue;

Pacific Blue Energy Corp., a Nevada corporation based in Flagstaff, Ariz.;

Tradeshow Marketing Co. Ltd., a Nevada corporation based in Bellevue, Wash.;

and Dr. Luis Carrillo, 74, of Mexicali, B.C., Mexico, defendant and relief defendant and father of attorney Carrillo.

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