Defendant Co-conspirators Allegedly Profited in Excess of $41 Million in Illegal Securities “Pump and Dump Scheme”

Acting Assistant Attorney General Rita M. Glavin of the Department of Justice’s Criminal Division and United States Attorney David E. O’Meilia for the Northern District of Oklahoma today announced the unsealing of a twenty-four (24) count indictment, returned by a federal grand jury in Tulsa, Oklahoma on January 15, 2009, charging five individuals with various crimes arising from their alleged scheme to defraud investors that reaped defendants in excess of $41 million through manipulating the publicly traded stocks of three companies. Two companies based in Tulsa, Oklahoma at the time of the alleged scheme were among those whose stock was manipulated: Deep Rock Oil & Gas, Inc. and Global Beverage Solutions, Inc., formerly known as Pacific Peak Investments. The third company, National Storm Management Group, Inc., has its principal place of business in Glen Ellyn, Illinois.

G. David Gordon, 47, a Tulsa attorney, and Richard Clark, 61, also of Tulsa, were arrested today and are will make their initial appearances this afternoon in the U.S. District Court for the Northern District of Oklahoma. Louisville, Ky., attorney James Reskin, 50, was also arrested today and is being scheduled to make his initial appearance in the U.S. District Court for the Western District of Kentucky. Dean Sheptycki, 41, a resident of the Bahamas, was arrested this morning by Bahamian authorities and currently awaits extradition to the United States. The indictment also charges Dallas-area resident Joshua Wayne Lankford, 35. Lankford’s current location is unknown, and law enforcement officials are seeking him as a fugitive.

In a related action, the Securities and Exchange Commission today filed a civil enforcement action in the Northern District of Oklahoma against Gordon, Lankford, and Sheptycki. That civil case number is 09-CV-061.

The grand jury indictment alleges that between April 2004 and December 2006, the defendants devised and engaged in a scheme to defraud investors known as a “pump and dump” in which they manipulated three publicly traded “A penny stocks,” that is, common stocks that trade for less than $5 per share in the over-the-counter market, rather than on national exchanges.  According to the indictment, the defendants executed the scheme by obtaining a majority of the free trading shares of stock of the company they intended to manipulate, using fraudulent and deceptive means to acquire the stock and/or remove the trading restrictions on the shares they obtained.

As charged, the defendants hid and “parked” their shares with various nominees, such as friends, relatives, or other entities that they owned and controlled. Subsequently, they engaged in coordinated trading in order to create the appearance of an emerging market for these stocks, after which they conducted massive promotional campaigns in which unsolicited fax and email “blasts” were sent to millions of recipients. These blasts touted the respective stocks without accurately disclosing who was paying for the promotions, omitted that the defendants intended to sell their shares, and induced unsuspecting legitimate investors to purchase stock in the companies. The defendants and their nominees took significant profits by selling large amounts of shares after they had artificially inflated the stock price. For each of the three manipulated stocks, the defendants’ sell-off caused declines of the stock price and left legitimate investors holding stock of significantly reduced value.

The indictment charges all five defendants with one count of conspiracy to commit securities fraud, wire fraud, and money laundering, nine counts of wire fraud, five counts of securities fraud, and six counts of money laundering in connection with the manipulation of three penny stocks. Gordon is also charged with one count of making a false statement in a matter within the jurisdiction of the Securities and Exchange Commission regarding the scheme to defraud. Additionally, the indictment charges Gordon with one count of wire fraud in connection with a fourth penny stock, that of New Jersey-based International Power Group, Ltd., and one count of obstruction of justice of an investigation into that alleged wire fraud violation.

According to the indictment, the defendants profited over $41 million from the overall scheme, and therefore, the indictment also seeks criminal forfeiture of $41.4 million from all five defendants in connection with the three penny stocks. Additionally, the indictment seeks criminal forfeiture of $2.74 million from Gordon in connection with the wire fraud involving the fourth penny stock.

A Grand Jury indictment is one method of charging defendants with alleged violations of federal law, and all defendants are presumed innocent unless and until the charges are proved beyond a reasonable doubt in a court of law.

If convicted, the conspiracy and false statement charges each carry a maximum sentence of 5 years in prison and a $250,000 fine. Each charge of wire fraud, as well as the obstruction of justice count, carries a maximum sentence of 20 years in prison and a $250,000 fine. The maximum sentence for each securities fraud count is 20 years in prison and a $5,000,000 fine, and the maximum sentence for each money laundering count is 10 years in prison and a $250,000 fine.

On July 22, 2008, Mark Byron Lindberg, age 40, of the Dallas, Texas area, pled guilty to a conspiracy alleging the same wire and securities fraud scheme and agreed to a $6,229,354 forfeiture money judgment for his participation in the scheme that bilked investors across the nation out of millions of dollars. Lindberg admitted that he and other unnamed co-conspirators attempted to illegally manipulate the stock price of various companies through a number of means including: acquiring a substantial amount of free trading shares of stock in the companies that were concealed in various brokerage accounts; creating and distributing to the public false and misleading promotional materials; and engaging in coordinated trading of stock in order to manipulate the price of the stocks being traded, including selling their stock while at the same time encouraging the public to buy.

U.S. Attorney O’Meilia stated: A Investors engaged in the purchase or sale of publicly traded stocks rely upon the integrity of securities markets to ensure that they receive a fair price and opportunity for potential profit, based upon accurate information and the free operation of principles of supply-and-demand. Congress and regulatory agencies have established a comprehensive and complex system of oversight and regulation to attempt to insure the fairness and integrity of these markets. ‘Pump and dump’ schemes hurt more than the immediate victims who bought the stock and lost their money B such fraudulent activities undermine investor confidence in the markets.”

Fort Worth Division United States Postal Inspector-in-Charge Randall C. Till said:  “The public has a right to believe that representations made to them, whether through U.S. Mail, fax or email, are true and accurate. Since the Mail Fraud statute was enacted by Congress in 1872, U.S. Postal Inspectors have been investigating alleged criminals just like the five defendants announced today who are charged with using the U.S. Mail and other communications means to perpetrate frauds against American consumers.”

The case is being prosecuted by Trial Attorney Andrew Warren of the Criminal Division’s Fraud Section, Assistant United States Attorney Catherine Depew for the Northern District of Oklahoma, and Special Assistant United States Attorney Kevin Muhlendorf, who is detailed to the U.S. Attorney’s Office from the Securities and Exchange Commission. The case is being investigated by the F.B.I., the I.R.S. Criminal Investigation Division, and the U.S. Postal Inspection Service.



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