4 Plead Guilty in Stock-Manipulation Scam
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Friday, September 7, 2007; Page D02
Four men in the United States and France pleaded guilty to fraud charges for their roles in share-manipulation scams involving 15 publicly traded companies. Two of the men also settled lawsuits brought by U.S. regulators.
Members of the ring offered to help small, privately owned companies sell stock, then hyped the shares' prices by trading them among conspirators and issuing spam e-mails to mislead prospective investors, the Justice Department said in a statement after the case was unsealed yesterday at federal court in Alexandria.
"This isn't just a case about defrauding small investors, it's also a case about defrauding small businesses," said John Reed Stark, a Securities and Exchange Commission lawyer.
The SEC and prosecutors are boosting cooperation this year as the agency focuses on scam artists who pump up penny stocks. In March, the SEC suspended trading in dozens of stocks to examine whether promoters used mass e-mails to inflate prices.
"Today's case is all part of our effort to crack down on all the participants of these micro-cap fraud schemes, especially the promoters," Stark said, referring to stocks of small companies.
Michael Saquella, 47, of Mesa, Ariz., and Justin Medlin, 26, of Paris, pleaded guilty last month to electronic mail fraud and conspiracy to commit securities fraud, the Justice Department said. Henry Zemla, 38, of Harris Township, Mich., and Lawrence Kaplan, 63, of Scottsdale, Ariz., pleaded guilty in July to securities-fraud conspiracy.
The maximum penalties for the criminal conspiracy charges are five years in prison and a $250,000 fine. To settle the SEC suit, two of the defendants must forfeit $3.3 million in profits and interest, the SEC said.
