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Nine Individuals Indicted in One of the Largest

International Penny Stock Frauds and Advance Fee

Schemes in History

Source 

crown capital management international relations, Nine Individuals Indicted in One of the 

Largest International Penny Stock Frauds and Advance Fee Schemes in History 

BROOKLYN, NY—Earlier today, the Federal Bureau of Investigation (FBI) arrested six men in

New York, Arizona, New Jersey, Florida, and California for engaging in an international fraud

conspiracy that spanned the globe from North America to Europe and Asia. A seventh

defendant was also arrested today on a provisional arrest warrant in Ontario, Canada. The

arrests resulted from an indictment charging nine defendants with 24 counts of securitiesfraud, wire fraud, and false personation of Internal Revenue Service (IRS) employees in

connection with the sale of securities and conspiracy (the investigation showed that the

identities used were fictitious and that no IRS employees were involved in the scheme). As set

forth in court filings, the defendants masterminded securities fraud and advance fee schemes

that victimized investors in approximately 35 nations and generated more than $140 million

through various brokerage and bank accounts under their control. To uncover the international

aspects of the scheme and gather evidence, the FBI used wiretaps in the United States and

undercover agents in foreign countries.

The indictment and arrests are the result of one of the largest international penny stock

investigations ever conducted by the Department of Justice and the FBI and mark the unveiling

of a multi-year, ongoing investigation, which included significant assistance from the Royal

Canadian Mounted Police (RCMP), as well as from other U.S. law enforcement agencies and law

enforcement authorities in England, as well as assistance from Thailand and China.

The defendants are charged in two separate but interrelated schemes. According to the

indictment, the defendants first engaged in an international "pump and dump" scheme during

which they fraudulently "pumped up" the share price of worthless penny stocks and then"dumped" billions of shares of those stocks by unloading them on unsuspecting victim investors

across the globe. Second, the defendants operated boiler rooms in at least four countries that

induced investors in penny stocks, including many of the same victims from the pump and

dump scheme, to pay advance fees that the defendants promised would enable the victim-

investors to sell their penny stocks and recover losses that they incurred. In reality, the

defendants simply stole the fees without providing any services, fraudulently extracting millions

of additional dollars from their victims.

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The charges and arrests were announced by Loretta E. Lynch, United States Attorney for the

Eastern District of New York; George Venizelos, Assistant Director in Charge, FBI, New York Field

Office; Toni Weirauch, Special Agent in -Charge, IRS, Criminal Investigation, New York; James C.

Spero, Special Agent in Charge, Homeland Security Investigations, Department of HomelandSecurity, Buffalo; and Robert O’Malley, Special Agent in Charge, Treasury Inspector General for

Tax Administration (TIGTA).

The Pump and Dump Scheme 

As alleged in the indictment, defendants Sandy Winick, Gary Kershner, Joseph Manfredonia,

Cort Poyner, Songkram Roy Shachaisere, and William Seals orchestrated one of the largest

international penny stock frauds in history. First, the defendants gained controlling interests of 

huge quantities of worthless stock in 11 public companies known in the industry as "file cabinet

businesses"—thinly traded companies with minimal assets and non-existent businessoperations, which in many cases were mere shell companies. They then pumped up the share

prices of the companies’ stock by engaging in fraudulent and illegal sales campaigns, which

included distributing false press releases, announcing non-existent business ventures and fake

mergers, posting false information on social media sites and bribing stock promoters and

brokers.

These efforts fraudulently inflated share prices so that the pump and dump defendants could

trade billions of shares of penny stocks that they owned and controlled at a profit, ultimately

generating more than $120 million worth of fraudulent stock sales in accounts under theircontrol. As a result of the defendants’ efforts, investors in 35 countries were defrauded in

connection with their purchase of the companies’ stock. 

To avoid detection, the defendants, many of whom operated from outside the United States,

were often careful to use “throwaway phones.” In fact, defendant Poyner was intercepted on a

wire communication reminding others in the scheme to use such mobile devices to avoid being

caught. The defendants also knew that they should not draw attention to their illegal trading

scheme. For example, defendant Winick boasted about the superiority of the charged scheme

compared to another more obvious scam, stating, “That deal is obviously a pump and dump.We know enough to be subtle.” 

The Advance Fee Scheme 

As the indictment alleges, defendants Winick, Gregory Curry, Kolt Curry, and Gregory Ellis

perpetrated a second scheme in which they fraudulently induced penny stock victims to pay

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advance fees, on the promise that the victims would then either be able to sell their securities

to other waiting investors or join lawsuits to reclaim their losses. In reality, the advance fees

were nothing more than a con, as neither the investors nor the lawsuits existed. To hoodwink

the penny stock owners, the advance fee defendants invented fake trading companies and a

fake law firm and then posed as employees of those entities while soliciting advance fees from

the penny stock victims.

To facilitate the scheme, the defendants established boiler rooms or call centers from which

members of the conspiracy would solicit advance fees from the unsuspecting penny stock

victims. The call centers were located in various locales around the world, including Canada,

Thailand, and the United Kingdom. Recently, the defendants began planning to open a new call

center in Brooklyn, New York. Some of the victims were told that they either needed to pay the

advance fee to remove restrictions that were placed upon their penny stock, which prevented

the victims from selling their stock in the market, or to join investors in a pending or anticipated

lawsuit to recover losses that they incurred while owning the penny stock. Victims were thentold that the advance fees were needed to convert the warrants of their stocks to a saleable

security. In several instances, the advance fee defendants even pretended to be IRS employees

collecting a bogus advance tax from victim investors before they could unload their penny

stocks (the investigation showed that the identities used were fictitious and that no IRS

employees were involved in the scheme). The victims were directed to send payment of the

advance fees to banks around the world, including bank accounts in New York City. The fraud

proceeds were then transferred through a funds transfer network located in Getzville, New

York, to an account maintained in Beirut, Lebanon. Ultimately, these defendants generated

more than $20 million in fraudulently obtained advance fees.

Defendant Kolt Curry described the advance fee scheme in the following way over an

intercepted wire communication: “I would say that 100 percent of these stocks are like uh pink

uh...just dumps...so...ya know they’re totally, they’re like, so a lot of these guys are dying...to

get rid of this crap....The money is good, it’s easy. It’s easy money. Definitely easy money, and

it’s good money.” In fact, while bragging about his prowess as a fraudster, defendant Kolt Curry

further stated, “I had a guy send me a million dollars over one phone call....He actually sent me

almost two million dollars over the period of the hit....I guess in the industry they coin it as a

smash and grab.” As for the group’s recent plans to open a call center in Brooklyn, New York,

defendant Kolt Curry said, “I tell you what man...hitting the Americans would be like taking

money from a baby.”