Men Sentenced for Penny Stock Fraud Scheme
Las Vegas, Nev. - Two men who operated a "pump and dump" penny stock fraud scheme in which false information was disseminated throughout the country from Nevada, have been sentenced for their guilty pleas to felony charges of Securities Fraud and Aiding and Abetting, announced Daniel G. Bogden, United States Attorney for the District of Nevada. THOMAS BECKER, age 52, of Las Vegas, was sentenced today by U.S. District Court Judge Phillip Pro to three years probation and six months of home detention with electronic monitoring, and HOMER LANGRILL, age 50, of Las Vegas, was sentenced on Thursday, January 15, 2004, by U.S. District Court Judge Howard D. McKibben to 13 months imprisonment. The defendants had previously been ordered to pay monetary penalties in a proceeding brought by the United States Securities and Exchange Commission (SEC). LANGRILL and BECKER released false and misleading information about a publicly-traded but legally defunct company in order to sell the stock at artificially increased prices. They made at least $70,000 on the scheme.
According to the court records, from approximately January 3, 2002, through late June 2002, THOMAS BECKER was the Chief Executive Officer and member of the Board of Directors of Greater Northwest Research & Development (GNRD), a publicly-traded "microcap" company that was licensed in Florida and conducted business in Nevada. The State of Florida dissolved the corporation in August 1996 because it failed to file mandatory reports. BECKER worked at the direction of HOMER T. LANGRILL, who was actually controlling the company but whose name was not disclosed in corporate documents. LANGRILL had two prior federal convictions in Virginia for wire fraud, for which he was sentenced to terms of imprisonment of three years and 16 months, respectively; had a prior federal conviction in Oregon for passing fictitious checks, for which he was sentenced to 30 months in prison; and had a prior grand theft and fraud conviction in Guatemala, for which he was served 12 months in a Guatemalan prison. BECKER knew LANGRILL was a convicted felon.
Between January 30 and the end of February 2002, LANGRILL and BECKER pumped false information about GNRD into the market, including false information about its legal status, the identity of its directors, its eligibility for quotation on the Over-The-Counter (OTC) Bulletin Board, and its future financial performance, in order to sell the stock at artificially high prices. BECKER and LANGRILL failed to disclose that GNRD was controlled by LANGRILL and that LANGRILL was a convicted felon. The false information was distributed in press releases and cable television infomercials, and on an Internet website, www.gnrd.com. The false information caused investors to purchase the stock, thus increasing its price. BECKER and LANGRILL then sold their shares of the stock at the artificially-increased price before the true information became known to the investing public.
In the three days prior to the defendants' dissemination of the first of six press releases, GNRD stock traded at between $0.23 to $0.25 per share on reported volume of between 1,000 and 10,000 shares. The day after the first press release was issued, the value of GNRD stock increased by approximately 40 percent to $0.35 per share, and volume increased by approximately 200 percent to 30,000 shares.
In the period in which BECKER and LANGRILL disseminated the false and misleading information about GNRD, BECKER and LANGRILL acquired at least 6,500,000 and 6,850,000 shares, respectively, of GNRD stock. BECKER sold more than two million shares of GNRD stock within 40 days after receiving them, generating at least $46,400 in profits for himself, and LANGRILL sold at least 92,500 shares of GNRD stock within 31 days of receiving them, generating at least $24,537 in profits. By October 31, 2002, the GNRD stock was trading at only $0.0001 per share.
The SEC also filed civil charges against LANGRILL and BECKER for the same conduct. In April 2003, Default Judgments were entered by the Court against both defendants. The Default Judgments permanently prohibit LANGRILL and BECKER from participating in offerings of penny stock and from acting as officers or directors of public companies. LANGRILL was ordered to pay monetary penalties to the SEC in the amount of approximately $50,000 and BECKER was ordered to pay monetary penalties in the amount of $93,000.
The criminal prosecution is the result of an investigation by the FBI and SEC, as part of the District of Nevada Corporate and Securities Fraud Task Force, comprised of federal, state and local law enforcement agencies, including the FBI, Internal Revenue Service Criminal Investigation, the SEC, the Postal Inspection Service, Nevada Secretary of State Securities Division, and the Las Vegas Metropolitan Police Department, Fraud Division. The mission of the Task Force is to identify and target for prosecution individuals and entities engaged in securities, commodities, and other corporate fraud within the state of Nevada. The case is being prosecuted by Assistant United States Attorney Justin J. Roberts.
Never, ever, make an investment based solely on what you hear on a television infomercial or read in an online newsletter or bulletin board posting, especially if the investment involves a small, thinly-traded company that is not well known. Federal securities laws require many public companies to register with the SEC and file annual reports. Anyone can access and download these reports from the SEC's EDGAR database http://www.sec.gov/edgar.shtml for free. Before you invest in a company, check to see whether it is registered with the SEC and read its reports. Some companies do not have to register their securities or file reports on EDGAR. If you can't find a company on EDGAR, call the SEC at (202) 942-8090 to find out if the company filed an offering circular under Regulation A or a Form D, and be sure to request a copy. Information on how to avoid investment scams is also available at the SEC website: www.sec.gov/investor/pubs/cyberfraud.htm.
You should also check with your state's securities regulator about any company in which you are considering investing. You can find that information on the North American Securities Administrators Association website: www.nasaa.org. They can check the Central Registration Depository (CRD) and tell you whether the broker touting the stock or the broker's firm has a disciplinary history. They can also tell you whether they have cleared the offering for sale in your state.
The National Association of Securities Dealers, Inc. can also give you a partial disciplinary history on the broker or firm that is touting the stock. Call their toll-free public disclosure hot-line at (800) 289-9999 or visit their website at http://www.nasdr.com.