SEC Hits Alleged Global Warming Busters
Seven individuals involved in a fraudulent pump-and-dump scheme in the stock of a sham technology firm have settled charges of Exchange Act violations from the Securities and Exchange Commission today for tampering stock prices.
Following similar charges against China Digital, Global Peopleline, and m-Wise and 8 individuals for pumping and dumping the securities of microcap firms through spam e-mail campaigns early this month, the SEC said CO2 Tech Ltd., purporting as a firm providing products and services to fight global warming, touted business relationship with several companies, including Boeing Company, to artificially inflate the prices of stock.
According to SEC’s lawsuit filed in U.S. District Court for the Southern District of Florida, CO2 Tech did not have significant assets or operations.
The pump-and-dump scheme was committed by stock promoters, traders, and a lawyer who wrote a fraudulent opinion letter, the SEC claimed.
The SEC said the pump-and-dump scheme was done from late 2006 to April 2007 through Red Sea Management Ltd., a Costa Rican asset protection company that laundered millions of dollars in illicit trading proceeds out of the United States on their clients’ behalf.
Jonathan Curshen, from Sarasota, Florida who founded and led Red Sea, David Ricci and Ronny Morales Salazar of San Jose, Costa Rica, who were Red Sea stock traders, Ariav Weinbaum and Yitzchak Zigdon of Israel, who were Red Sea clients, Robert Weidenbaum, a stock promoter from Coral Gables, Florida who operates a company called CLX & Associates, Michael Krome of Lake Grove, N.Y., a lawyer who allegedly wrote a fraudulent opinion letter, have altogether settled the separate charges of the SEC and the Justice Department’s Criminal Division.
Weinbaum and Zigdon allegedly initiated the pump-and-dump of CO2 Tech, with Krome issuing a fraudulent opinion letter that enabled them to fully control the shares of CO2 Tech. Large quantities of CO2 Tech stock were then sold to investors by Red Sea which was hired by Weinbaum, the SEC claimed.
Meanwhile, Ricci and Salazar allegedly created a false representation that the market for the CO2 Tech stock was deeper than it actually was by placing multiple layered orders, which inflated the prices. The pump-and-dump scheme eventually earned for them more than $7 million in illicit profits.
Zigdon had disseminated the materially false and misleading information about CO2 Tech through press releases while Weinbaum hired Weidenbaum to redistribute the false information through websites, spam e-mails and fax blasts, the SEC added.
The pump-and-dump scheme resulted in 81 percent increase to CO2 Tech’s stock and 1,573 percent rise in the volume of trades within a day.