A microcap company that went from supposedly mining in Canada to selling sandwich spreads in Nevada is one of the companies involved in a stock manipulation scheme unveiled by the SEC Tuesday.
Everock Inc., the mining company, which changed its name to Nature’s Peak in Nevada, is among the defendants—15 individuals and 19 firms—that are charged with manipulating penny stocks through a pump-and-dump scheme that artificially inflated the price of select stocks and sold them at a profit, the SEC says.
The scheme included firms that allegedly acted as unregistered broker-dealers catering to customers who sought to conceal their stock ownership and manipulate the market for microcap securities, according to the complaint filed in Federal District Court in Manhattan.
The SEC charged the defendants with fraud, manipulative trading, touting and registration violations. Nine of the defendants are also named in related criminal indictment.
The SEC complaint alleges that Costa Rica-based Moneyline Brokers and its founder Harold Bailey “B.J.” Gallison II unlawfully operated as a broker-dealer for U.S.-based customers who engaged in the pump-and-dump schemes. According to the complaint, Moneyline and certain of its employees routinely accepted transfers of microcap stocks from the U.S. customers and had stock certificates reissued in Moneyline’s name to conceal the true owners of the shares.
The Nature’s Peak scheme involved promotions on Facebook and produced $2.5 million in profits for some of the defendants.
The other microcap involved is Warrior Girl, a shell company controlled by Carl H. Kruse Sr. and Carl H. Kruse Jr., both of Miami. Warrior Girl supposedly started out as a hydroelectric power company, switched to extracting oil from tar sands and then switched again to online education, the SEC says. This deal resulted in $2.3 million in profits for the defendants.
“This case demonstrates the commission’s resolve to relentlessly pursue the villains behind these microcap fraud schemes wherever in the world they may be hiding,” says Andrew M. Calamari, director of the SEC’s New York Regional Office.
In addition to Moneyline, the complaint alleges that two Costa Rica-based firms, Sandias Azucaradas CR S.A. and Vanilla Sky S.A., and three Nevada-based firms, Bastille Advisors Inc., Club Consultants Inc., and Jurojin Inc., operated as unregistered broker-dealers. Employees of the firms who were charged are Roger G. Coleman Sr. of Las Vegas, Ann M. Hiskey of Costa Rica, Robin M. Rushing and David K. Rushing, both of Spokane, Wash., and Michael J. Randles of Costa Rica.
Promoters who were charged are Mark S. Dresner of Dix Hills, N.Y., Antonio J. Katz of Red Bank, N.J., Charles S. Moeller of Sea Cliff, N.Y., Richard S. Roon of Rumson, N.J., AKAT Global LLC, Digital Edge Marketing LLC, Oceanic Consulting LLC and Spectrum Research Group Inc.