NINE CHARGED IN “PUMP AND DUMP” SECURITIES FRAUD SCHEME
Defendants Conspired to Obstruct a Grand Jury and FBI Investigation
Eight people were indicted yesterday by a federal grand jury in Seattle, Washington for a variety of charges related to a “pump and dump” securities fraud scheme. As part of the scheme, the defendants secretly acquired publicly traded companies, sent out “junk faxes” and press releases, and sold stock through nominee brokerage accounts in the U.S., Canada, and the Turks and Caicos Islands. The public companies involved were all Washington corporations: America Asia Energy Corporation, Coattec Industries, Inc., Detex Security Systems, Inc., and Global Gaming Network, Inc. The indictment calls for the forfeiture of some $1.2 million illegally derived from the scheme. A ninth defendant, a Bellevue lawyer, had already pleaded guilty to his role in the scheme.
The twenty-one count indictment charges each of the eight defendants with one or more of the following crimes: Conspiracy to Commit Securities Fraud and Mail Fraud, Securities Fraud, Mail Fraud, International Money Laundering, Conspiracy to Obstruct Justice, Falsify Documents, and Make False Statements, Conspiracy to Obstruct Justice and Commit Perjury, Obstruction of Justice, Perjury, Criminal Contempt, and Failure to File Federal Income Tax Returns. Two of the defendants, BEVERLEE P. KAMERLING and NICHOLAS J. ALEXANDER, were arrested this morning in the Western District of Washington and will make their initial appearances in federal court at 2:30 today.
BEVERLEE P. KAMERLING, 63, of Bellevue, Washington was one of the leaders of the scheme. In 1999, KAMERLING was permanently barred by court order from serving as an officer or director of a public company, and was permanently barred from violating the federal securities laws. In 2000, KAMERLING was ordered to pay nearly $1.5 million in ill gotten gains from a previous stock fraud scheme. According to the indictment, she and her co-conspirators hid their involvement in the stock fraud scheme by installing her mother, son, and boyfriend as officers of the various companies she and her co-conspirators acquired. In 2004 and 2005, KAMERLING failed to file an income tax return on as much as $250,000 and $600,000, respectively, in income, including funds she obtained as part of the scheme.
KAMERLING’s son, NICHOLAS J. ALEXANDER, 22, is also charged in the indictment. As alleged in the indictment, ALEXANDER served as an officer and director of all of the public companies named in the indictment, and shredded documents in Boca Raton, Florida after he learned about the existence of a grand jury subpoena. ALEXANDER later arranged for prepaid cell phones to be used to avoid detection by the FBI.
As alleged in the indictment, other conspirators who played roles in the scheme also concealed their involvement in the companies from the investing public, as well as their prior SEC actions and criminal convictions. JOEL RAMSDEN, 32, of Delray Beach, Florida, had a pending SEC enforcement action against him, JOHN E. JOHANSEN, 37, of Plantation, Florida, had a conviction for conspiracy to commit credit card fraud, and JOHN E. WORTHEN, 66, of Salt Lake City, Utah, had a prior SEC injunction, a conviction for criminal contempt of the injunction, and a conviction for attempted income tax evasion.
KAMERLING, ALEXANDER, RAMSDEN, JOHANSEN and WORTHEN are all charged with Conspiracy to Obstruct Justice, Falsify Documents and Make False Statements due to their efforts to obstruct the grand jury investigation and the FBI investigation of their securities fraud scheme. Three additional defendants also based in Florida, DONALD I. GOLDSTEIN, 65, of Highlands Beach, Florida, his son, JAMIE S. GOLDSTEIN, 35, of Boca Raton, Florida, and SETH QUINTO, 36, of Miami, Florida, were charged with Conspiracy to Obstruct Justice and Commit Perjury in connection with false statements they made to the grand jury in Seattle that was investigating the scheme.
In addition to the eight indicted, Bellevue attorney Tolan S. Furusho pled guilty last week to Conspiracy to Commit Securities Fraud for his role in the scheme, and to two counts of Failure to File Federal Income Tax Returns.
The case was investigated by the U.S. Postal Inspection Service (USPIS), the Washington State Department of Financial Institutions (DFI), the FBI, and the Internal Revenue Service Criminal Investigation (IRS-CI).
Michael Stevenson, Director of the Department of Financial Institution’s Securities Division, stated: “DFI is dedicated to preserving the integrity of the marketplace for all those who buy and sell stocks.”
Ronald Verrochio, Inspector in Charge of the Postal Inspection Service in Seattle, stated: “In fraudulent schemes like these there is still a need to transmit monetary instruments, like stock certificates, through the U. S. Mail and commercial carriers. It is our mission as United States Postal Inspectors to protect the Postal Service, our customers, and the American public from this type of abuse. This case is indicative of our strong commitment to that mission.”
The U.S. Attorney’s Office wishes to acknowledge the assistance of the U.S. Securities and Exchange Commission (SEC), the Integrated Market Enforcement Team (IMET) of the Royal Canadian Mounted Police (RCMP), and the Financial Industry Regulatory Authority (FINRA) Criminal Prosecution Assistance Group.
The case is being prosecuted by Assistant United States Attorney Jim Lord, and Special Assistant United States Attorney Robert Kondrat. Mr. Kondrat is an attorney with the Washington State Department of Financial Institutions, specially designated to handle securities fraud cases in federal court.
The charges contained in the indictment are only allegations. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law. If convicted, the defendants each face a sentence of up to twenty years of incarceration and up to $5,000,000 in fines on the most serious charges, including Securities Fraud and Mail Fraud.
For additional information please contact Emily Langlie, Public Affairs Officer for the United States Attorney’s Office, at (206) 553-4110.