BOSTON – The principal of two companies was sentenced yesterday for her role in a fraudulent scheme in which executives agreed to pay secret kickbacks to an investment fund representative.
Kelly Black-White, 52, of Mesa, Ariz., was sentenced by U.S. District Court Judge Denise J. Casper to one year and one day in prison, two years of supervised release, a $7,500 fine and forfeiture of the illegal earnings. In September 2013, Black-White pleaded guilty to conspiracy to commit securities fraud and wire fraud.
Black-White, the principal of Premier Funding, Inc. and Premier Services, Inc., provides investor and public relations services to publicly traded companies. Black-White was sentenced for her role in a fraudulent scheme in which highly-placed executives agreed to pay secret kickbacks to an investment fund representative who had offered to steer his investment fund to buy stock in their companies. Black-White’s role involved referring such executives to the investment fund representative so that those executives could enter into the kickback arrangement. In exchange, Black-White accepted a portion of the kickbacks paid by the executives. Unbeknownst to Black-White, the purported investment fund representative was actually an undercover federal agent.
Black-White’s conviction and sentence followed a year-long investigation focusing on preventing fraud in the microcap stock markets. Microcap companies are small publicly-traded companies whose stock often trades at pennies a share. Fraud in the microcap markets is of increasing concern to regulators as such markets have proven to be 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 Exchange Commission.
The Securities and Exchange Commission, which conducted a parallel civil investigation alongside the FBI undercover operation, cooperated with criminal authorities in bringing these charges, as well as charges against other defendants who participated in the kickback scheme. To date, 14 other individuals have been charged and convicted for their participation in the scheme.
United States Attorney Carmen M. Ortiz and Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The case was prosecuted by Assistant U.S. Attorneys Vassili Thomadakis, Eric P. Christofferson, and Sarah E. Walters of Ortiz’s Economic Crimes Unit.
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.