Four, Including An Anti-Money Laundering Consultant, Arrested For Multi-Million Dollar Securities Fraud And Money Laundering Schemes
The Defendants Planned a Pump and Dump Scheme and Sought To Launder $2 Million in Illegal Proceeds Through Offshore Accounts
Four defendants were arrested today on charges of securities fraud conspiracy and money laundering conspiracy for their involvement in schemes to fraudulently manipulate the stock of BioCube, Inc. (BioCube), a U.S. publicly traded company, and to launder approximately $2 million in illegal proceeds using offshore bank and brokerage accounts. Since 2010, BioCube has purported to have a series of different business purposes, including, most recently, planning to market and distribute devices for detecting marijuana on a user’s breath. The charged individuals are: Chris Messalas, a former securities broker previously barred by the Securities and Exchange Commission (SEC); Boris Rubizhevky, the former Chief Executive Officer of BioCube; Michael Garnick, a Philadelphia-based attorney; and Dimitrios Argyros, an anti-money laundering consultant. Messalas, Rubizhevsky and Garnick were charged with securities fraud conspiracy. Messalas and Argyros were charged with money laundering conspiracy.
Argyros was arrested at JFK International Airport after arriving on a flight from Cyprus via London, Messalas was arrested at his home in New York and Rubizhevsky was arrested in New Jersey. Their initial appearances are scheduled for this afternoon before United States Magistrate Judge Cheryl L. Pollak at the federal courthouse in Brooklyn. Garnick was arrested in Pennsylvania. His initial appearance is scheduled for this afternoon before Magistrate Judge Thomas J. Rueter at the federal courthouse in Philadelphia, Pennsylvania.
The charges were announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Kathy A. Enstrom, Acting Special Agent-in-Charge, United States Internal Revenue Service, Criminal Investigation, New York (IRS-CI).
“As alleged in the criminal complaint, the defendants planned a pump and dump scheme, and money laundering of the proceeds, using offshore accounts and an anti-money laundering consultant to avoid detection by law enforcement,” stated Acting United States Attorney Rohde. “Together with our law enforcement partners, we will continue our efforts to protect the investing public, safeguard the financial integrity of our banking system and prevent the use of offshore bank and brokerage accounts to subvert U.S. laws and regulations.” Ms. Rohde thanked the Securities and Exchange Commission for its cooperation and assistance on the investigation.
“When would-be stockholders purchased shares of BioCube, Inc., they knew about the market risks involved in investing,” stated Assistant Director-in-Charge Sweeney. “What they didn’t know was that the odds had already been stacked against them, as alleged, in this ruse concocted by the four individuals charged today. Those who employ schemes to capitalize on other people’s losses will most certainly be brought to justice, and we’re here to remind criminals that this type of dishonorable behavior will never be acceptable. As such, the FBI and our partners will continue to uphold the promise we made to those who invest their trust in us.”
“At this time of year, when hard working citizens are sitting down to prepare their tax returns, IRS-Criminal Investigation (IRS-CI) remains vigilant in our pursuit of those unscrupulous individuals that defraud the American public as well as the government,” stated Acting Special Agent-in-Charge Enstrom. “IRS-CI is proud to bring our forensic accounting skills to this joint venture and help put a stop to this and other types of white collar crime, as alleged in the criminal complaint.”
According to the complaint unsealed today in Brooklyn federal court, Messalas, Rubizhevsky and Garnick engaged in a scheme to defraud BioCube’s investors and potential investors by concealing Messalas’s beneficial ownership and control of BioCube shares, so that Messalas could exercise control over the price and trading of BioCube’s stock.
As the complaint further alleges, Messalas and Argyros engaged in a related conspiracy to launder approximately $2 million in proceeds of the BioCube “pump and dump” scheme by depositing BioCube shares into offshore accounts in the names of nominees in locations including Cyprus and the Bahamas. The scheme was designed to launder a portion of the fraudulent proceeds from the stock manipulation scheme from the United States through offshore accounts, and circumvent the IRS’s reporting requirements under the Foreign Account Tax Compliance Act (FATCA). As alleged in the complaint, Argyros touted his ability to capitalize on his anti-money laundering expertise during conversations with an individual posing as a co-conspirator in the money laundering scheme who, unbeknownst to Argyros, was working with the FBI.
The charges in the complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted of the charges against them, Messalas faces a maximum sentence of 25 years’ imprisonment, Rubizhevsky and Garnick face maximum sentences of five years’ imprisonment, and Argyros faces a maximum sentence of 20 years’ imprisonment.
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The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Tyler Smith, Alicyn Cooley and Jack Dennehy are in charge of the prosecution.
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Staten Island, New York
Closter, New Jersey
Ho-Ho-Kus, New Jersey
E.D.N.Y. Docket No. 17-MJ-321