Vancouver Man Charged with Securities Fraud and Conspiracy for Impersonating President of Penny Stock Company
BOSTON – A resident of Vancouver, Canada, was charged yesterday in connection with a pump-and-dump scheme involving a penny stock company for which he impersonated the company’s president—an otherwise fictitious individual—and established a website containing false and misleading statements about the company’s purported business.
Shane Schmidt, 52, was charged in a criminal complaint unsealed today with one count of securities fraud and one count of conspiracy to commit securities fraud. Schmidt is believed to currently be in Canada.
According to the complaint, beginning in or about December 2018, Schmidt purported to be “John Scott,” the sole director and officer of the company Sandy Steele Unlimited, Inc. (“SSTU”). Acting as John Scott, Schmidt provided fraudulent information to the stock quotation service OTC Markets, including fake documents purporting to reflect John Scott’s authorized takeover of SSTU and a fake passport for John Scott, bearing Schmidt’s picture. Schmidt also established a website for SSTU that described SSTU’s purported heated garment business, but which used false and misleading pictures of products for sale by other manufacturers from other websites. Schmidt allegedly took these steps in order to enable SSTU’s stock to trade via OTC Markets, to generate interest in the stock, and to share in the proceeds of stock sales, which he later did. At or about the same time as a boiler room campaign promoted the stock in the fall of 2019, SSTU’s stock price increased dramatically as investors purchased it, before later precipitously falling.
The securities fraud charge provides for a sentence up to 20 years in prison, three years of supervised release and a fine of $5 million. The conspiracy to commit securities fraud charge provides for a sentence up to five years in prison, three years of supervised release, and a fine of $250,000, or twice the gross gain or loss, whichever is greater. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Andrew E. Lelling and Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Office made the announcement. Assistant U.S. Attorney James R. Drabick of Lelling’s Securities and Financial Fraud Unit is prosecuting the case.
The details contained in the charging documents are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.