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Thursday, July 11, 2024 | Back issues
Courthouse News Service Courthouse News Service

Subpoena Sought in Penny Stock Probe

McKINNEY, Texas (CN) - The New York County District Attorney wants to subpoena a Texas bank for information about an alleged penny stock scheme in New York.

District Attorney Cyrus Vance Jr. seeks information about Howard Appel, the alleged mastermind of a penny-stock scheme, according to documents filed in Texas to support an out-of-state subpoena.

Among the documents is a sworn statement from Sarah Sacks, an assistant district attorney in New York County.

Sacks describes the investigation as one that "involves a securities manipulation scheme orchestrated by an individual named Howard Appel ('Appel') and his accomplices and co-conspirators."

Sacks says the case was referred to her office by the SEC.

"Information collected to date, including bank records, securities trading records, and email communications, shows that Appel has engineered schemes whereby he gets control of large blocks of thinly traded penny stocks and then manipulates the markets in those stocks so he can sell them at an artificially inflated price," Sacks wrote. "Bank records for the penny stock companies which Appel uses for his schemes are relevant to this investigation because they show whether there are transactions between Appel and his accomplices and co-conspirators and the companies themselves and whether there are, and the volume of, any legitimate business expenses made from the accounts, among other things.

"Information contained in the records my office has obtained indicate that Red Mountain Resources, Inc. is one of the corporations whose stock Appel and his co-conspirators have manipulated. Information also indicated that both Red Mountain Resources, Inc. and an affiliated company, RMR Operating, LLC, have held and used bank accounts at Independent Bank."

New York Supreme Court Justice Larry Stephen recommended on Nov. 20 that a Texas judge order compliance with the out-of-state subpoena.A hearing before Collin County Judge Ray Wheless was scheduled for Thursday morning, Dec. 4.

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