Canadian National Sentenced for Securities Fraud
BOSTON – A Canadian national who resides in Los Angeles was sentenced today in federal court in Boston for his role in a massive global securities fraud scheme that sought to generate $15 million in fraudulent proceeds.
Morrie Tobin, 57, who resides in Los Angeles, Calif., was sentenced by U.S. District Court Judge Nathaniel M. Gorton to one year and one day in prison, two years of supervised release and ordered to pay a fine of $100,000 and forfeiture of $4 million. In February 2019, Tobin pleaded guilty to one count of conspiracy to commit securities fraud and one count of securities fraud.
From 2013 to 2018, Tobin and co-conspirators Milan Patel, Matthew Ledinva and Roger Knox conspired to commit securities fraud by disguising their ownership and control of various microcap securities, and employing paid promotional campaigns and manipulative trading techniques to artificially inflate the price and trading volume of those stocks so that Tobin and others could secretly sell their shares of those stocks at a substantial profit.
Tobin and others acquired the majority of the shares of GS Valet, a public shell company with minimal assets and operations, and then renamed it International Metals Streaming Corporation (IMST). Tobin, Patel and Ledinva then distributed the shares of IMST among four offshore entities registered in the names of various parties. From December 2016 to June 2017, Tobin and the co-conspirators orchestrated a reverse merger of IMST into Environmental Packing Technology (EPTI), which became a publically-traded company, and then caused 10.5 million shares held in the offshore entities to be transferred to Knox’s asset management firm and a separate brokerage firm. During this time, Tobin and the co-conspirators raised $2.9 million in private placement of shares of EPTI, and used a portion of this money to pay a third-party stock promoter to artificially promote the shares of EPTI. From June 9 to June 27, 2017 – when the Securities and Exchange Commission halted trading in EPTI shares – the co-conspirators directed the sale of EPTI shares held by the offshore entities, thereby generating proceeds of approximately $1,519,182. At sentencing, the Court found that Tobin and his co-conspirators intended to generate $15 million in proceeds based on the number of shares under their control.
Patel pleaded guilty in February 2019 and is scheduled to be sentenced on Thursday, Aug. 13, 2020. Ledinva was sentenced in June 2020 to 30 months of probation and ordered to pay a fine of $50,000. Knox previously pleaded guilty and is currently scheduled to be sentenced on Sept. 30, 2020.
United States Attorney Andrew E. Lelling and Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division made the announcement today. The Boston regional office of the SEC provided assistance with the investigation. Assistant U.S. Attorneys Eric S. Rosen and James R. Drabick of Lelling’s Securities, Financial and Cyber Fraud Unit are prosecuting the case.