Boston - A Canadian man was charged yesterday with using kickbacks in order to trigger investments in two thinly-traded stocks.
Seijin Ki, 42, is charged with wire and mail fraud arising out an undercover FBI operation. According to the charges filed in U.S. District Court, Ki paid secret kickbacks to an investment fund representative in exchange for having the investment fund buy stock in two publicly-traded companies, Lightlake Therapeutics, Inc. and Church & Crawford, Inc. The kickbacks were concealed by using sham consulting agreements and other fraudulent documents. What Ki did not know was that the purported investment fund representative was actually an undercover agent.
The charges follow a year-long investigation focusing on preventing fraud in the micro-cap stock markets. Microcap companies are small publicly-traded companies whose stock often trades at pennies a share. Fraud in the microcap markets is concerning to regulators as such markets are fertile grounds for fraud and abuse. This is, in part, because accurate information about microcap stocks may be difficult for the average investor to find, since many microcap companies do not file financial reports with the Securities and Exchange Commission.
Ki, who is the fifteenth defendant charged criminally with having participated in the undercover operation, was arrested on Nov. 5, 2012.
If convicted on the mail and wire fraud charges, Ki faces up to 20 years in prison, to be followed by three years of supervised release and a $250,000 fine, on each count.
The SEC, which conducted a parallel civil investigation alongside the FBI undercover operation, cooperated with criminal authorities in bringing these charges, as well as the charges against the 14 other defendants.
U.S. Attorney Carmen M. Ortiz and Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation Boston Field Division, made the announcement. The case is being prosecuted by Assistant U.S. Attorneys Sarah E. Walters and Vassili Thomadakis of Ortiz’s Economic Crimes Unit.
The details contained in the Complaint are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.