FOR IMMEDIATE RELEASE|
TUESDAY, SEPTEMBER 30, 2003
TDD (202) 514-1888
SEVEN INDIVIDUALS INDICTED IN ANTHRAX-RELATED
‘PUMP AND DUMP’ SCHEME
WASHINGTON, D.C. - Assistant Attorney General Christopher Wray of the Criminal Division today announced that a federal grand jury in the District of Columbia has indicted seven individuals in connection with a securities fraud “pump and dump” scheme involving a company named 2DoTrade, Inc. The indictment was returned on August 20, 2003, and the case was unsealed today after several defendants were apprehended.
The eight-count indictment names as defendants: Barry Gewin, 36, of Enon Valley, Pennsylvania; Michael Karsch, 43, an attorney from Boca Raton, Florida; Dominic Roelandt of Dehderhoutem, Belgium; George Taylor, 63, of Ayrshire, Scotland; L. Van Stillman, 55, an attorney from Delray Beach, Florida; David Wood, 51, of Charlotte, North Carolina; and Clinton Walker, 35, of Charlotte, North Carolina. Roelandt was arrested in Luxembourg on September 29, 2003 pursuant to an international warrant. Gewin was arrested in Pennsylvania on September 29, and Stillman and Karsch were arrested in South Florida also on September 29, 2003. Wood made his initial appearance today in Charlotte, North Carolina.
The indictment alleges that the defendants were part of a scheme to manipulate the market for 2DoTrade stock through claims that the company had over $300 million in commodities contracts. The indictment further alleges that the company falsely claimed it had a product that could kill the anthrax virus, to capitalize on the October 2001 anthrax attacks. The indictment charges the defendants with conspiracy to commit securities fraud and wire fraud, as well as substantive counts of securities and wire fraud.
2DoTrade, Inc., was a Nevada corporation purportedly headquartered in British Columbia, Canada, and London, England. The common stock of 2DoTrade was registered with the U.S. Securities and Exchange Commission and was traded under the symbol “TDOT” on the Over the Counter Bulletin Board, a quotation service operated by the NASD.
“The charges announced today demonstrate the Justice Department’s commitment to prosecuting anyone who seeks to fraudulently manipulate the stock market,” said Assistant Attorney General Christopher Wray of the Criminal Division. “Fraud that capitalizes on the public’s fears about the deadly anthrax attacks is no way to do business.”
According to the indictment, the defendants fraudulently pumped up the price and volume of TDOT stock by engaging in aggressive and misleading promotional campaigns, including the issuance of several press releases that falsely claimed the company had contracts for various goods and commodities worth over $300 million. In reality, the contracts were bogus and were never executed. Later, in a renewed effort to fraudulently raise TDOT’s flagging stock price, the conspirators allegedly exploited the publicity generated by the October 2001 anthrax attacks by fraudulently claiming that TDOT had an anti-anthrax product.
During the course of the conspiracy and as part of the defendants’ campaign to entice unsuspecting investors to buy TDOT stock, the defendants allegedly disseminated millions of spam e-mails and faxes without disclosing their ownership interest in the vast majority of TDOT stock. The indictment alleges that at the same time that defendants were promoting TDOT stock, the defendants profited by dumping their stock into an artificially inflated market to unsuspecting investors.
According to the indictment, during the initial phase of the scheme, while TDOT had an apparent market capitalization of over $20 million, in reality, the company was worthless - having no employees and no business operations. While the defendants collectively sold over $1.6 million worth of TDOT stock, they were prevented from selling additional shares when the SEC suspended trading in TDOT shares.
This case was investigated by the Securities and Exchange Commission - Fort Worth Regional Office, and referred to the Fraud Section of the Criminal Division at the Justice Department by NASD. The case was prosecuted by Department of Justice Trial Attorneys Raja Chatterjee and Dorothy McCuaig.
Today, the Securities and Exchange Commission’s office in Fort Worth, Texas, filed a parallel civil action that names all seven of the defendants.
An indictment is merely an accusation. Defendants are presumed innocent until and unless proven guilty.