Las Vegas Attorney Max Tanner Sentenced To 96 Months in Prison for Multi-million Dollar "Pump and Dump" Securities Fraud Scheme
Las Vegas, Nev. - Daniel G. Bogden, United States Attorney for the District of Nevada, Eileen J. O'Connor, Assistant Attorney General of the United States Department of Justice Tax Division, Byram Tichenor, Special Agent-in-Charge of IRS Criminal Investigation for Nevada, and Ellen B. Knowlton, Special Agent-in-Charge of the Federal Bureau of Investigation for Nevada, announced that MAX CLARK TANNER was sentenced today in U.S. District Court in Las Vegas, Nevada, to 96 months in federal prison for his conviction on 37 counts of Conspiracy, Securities Fraud, Wire Fraud, Money Laundering, Tax Evasion, and Filing False Individual Tax Returns. The sentence was handed down by U.S. District Court Judge Kent J. Dawson.
TANNER, a Las Vegas lawyer and former IRS attorney, was one of five individuals indicted by a federal grand jury in Las Vegas on September 19, 2000. Following a five-week trial in Las Vegas, TANNER was convicted of all counts named against him. Kevin J. Ruggiero, a Lyndhurst, New Jersey securities broker and Mark A. Taylor, a Tampa, Florida stock promoter, each pleaded guilty to fraud and testified at the trial as government witnesses. Kenneth W. Kurtz, a Salt Lake City stock promoter, pleaded guilty to filing false tax returns. Dennis D. Evans, a Las Vegas stock promoter, was tried with defendant TANNER and convicted of conspiracy. The district court subsequently issued an order granting Evans a new trial. A government motion to reconsider that court order is pending.
According to the court records, TANNER; Kevin J. Ruggiero; Dennis D. Evans; Kenneth W. Kurtz; and Mark A. Taylor; entered into an illicit agreement to defraud investors through the sale of the stock of Maid Aide Inc., a Las Vegas company. The defendants orchestrated a sham merger between Maid Aide and a Florida trucking company, and issued a nationwide press release through a news service firm, announcing the merger in order to create an illusion of value of the Maid Aide stock to the investing public. The defendants used a variety of means to create an artificial market demand for Maid Aide stock and manipulated the price by using registered brokers, such as Ruggiero, and cold callers posing as registered brokers, to solicit individual investors by making false and misleading statements concerning the company and the true identity of the brokers selling the stock. Excessive undisclosed cash kickbacks were paid to those brokers, in amounts equal to between 50 percent and 70 percent of the price of each Maid Aide share sold.
TANNER also used an off-shore account in the Cayman Islands to conceal his profits and promote the scheme by paying kickbacks to Ruggiero. During the course of the conspiracy, the price of Maid Aide stock went from a high of $9.37 per share in August 1998 to 13 cents per share after the defendants concluded their efforts to sell Maid Aide stock to the investing public. Evidence introduced at the trial showed that TANNER failed to report taxable income of more than $10 million resulting from the sale of stock from 1996 to 1998.
Judge Dawson increased TANNER'S sentence for being an organizer and leader in the conspiracy, finding that TANNER controlled the price of the stock, had knowledge of extraordinary commissions, directed persons in the Cayman Islands, and had secret nominees. TANNER was also ordered to pay approximately $3.25 million in restitution to the victims of the offense, and will be placed on three years of supervised release following his release from custody. Judge Dawson ordered that TANNER be immediately placed into the custody of the U.S. Marshals Service.
This case was investigated by Special Agents of Internal Revenue Service Criminal Investigation and the Federal Bureau of Investigation. The Market Regulation Department of NASD Regulation Inc. and the Securities and Exchange Commission's Division of Enforcement also provided assistance to the investigation. Trial Attorneys Mark D. Lytle, Thomas J. Krysa, and Brian Bailey of the Department of Justice's Tax Division were in charge of the prosecutions.
U.S. Attorney Daniel G. Bogden states, "I am very pleased with the sentence. It is through the concerted and coordinated efforts of our law enforcement agencies and prosecution team that we achieve successful prosecutions of defendants like Max Tanner. My special thanks and recognition to Mark Lytle, Thomas Krysa, and Brian Bailey for all their hard work and dedication in so successfully presenting the Government's case."
Byram Tichenor, Special Agent-in-Charge of IRS Criminal Investigation for Nevada, states, "We are very pleased with today's sentence. Financial investigations such as these are difficult and time consuming, but are particularly rewarding in that the interests of all honest tax-paying citizens are served as well as those of individual investors."