Two more charged in $54 million stock fraud case
Two criminal informations were filed charging Kieran Kuhn, 33, of Port Washington, N.Y., and Kona Jones Barbera, 35, of Asheville, N.C, each with one count of conspiracy to commit securities fraud and wire fraud, said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio, and Stephen D. Anthony, Special Agent in Charge of the FBI's Cleveland office.
Kuhn and Barbera conspired with Zirk de Maison and others to defraud investors and potential investors in several public issuers, including Kensington Leasing, Ltd., Casablanca Mining, Ltd., Lustros, Inc., and Gepco Ltd., (the manipulated companies), by issuing millions of shares to themselves at little or no cost and then artificially controlling the price and volume of traded shares by, among other means, paying undisclosed commissions to brokers, former brokers, and boiler-room operators and promoters such as Kuhn and Barbera, for soliciting investors to make investments in, and fraudulently concealing the ownership interests of, the manipulated companies. This took place between April 26, 2011, and September 18, 2014, according to the information.
Little or no portion of the investments went to fund the operations of the manipulated companies. Rather, de Maison, Kuhn, Barbera and their co-conspirators used most of the investments to enrich themselves, according to the information.
For each of the manipulated companies, de Maison and other co-conspirators controlled a substantial number of outstanding shares through their personal companies, co-conspirators, and associates over which they had influence and control. Kuhn owned and operated a boiler room called Small Cap Resources in New York City, where he employed promoters such as Barbera to cold call and solicit potential investors to purchase shares of the manipulated companies. Zirk de Maison and others dictated what stocks Kuhn and Barbera pushed. The cold calls to potential investors typically coincided with favorable press releases or other information that Zirk de Maison caused to be released, according to the information.
Kuhn and Barbera touted the manipulated companies using high-pressure sales tactics and misrepresentations about the value of the companies and their stock. The boiler room promoters did not disclose that Zirk de Maison and other co-conspirators paid them commissions on the sale of Zirk de Maison’s and other co-conspirator’s stock to the investors, either on the open market or through private placements, according to the information.
de Maison and his co-conspirators caused more than $54 million to be invested in the purchase of stock in the manipulated companies and caused a loss to investors in the amount of approximately $27 million from the scheme. de Maison profited through the fraudulent scheme relating to the companies’ stocks. de Maison received and embezzled approximately $30 million in investor monies. Kuhn received and embezzled approximately $2.6 million. Barbera received and embezzled approximately $251,920, according to the information.
The informations were filed by Assistant U.S. Attorneys Christos N. Georgalis and Adam Hollingsworth after an investigation by agents of the Federal Bureau of Investigation.
If convicted, the defendants’ sentences will be determined by the Court after a review of factors unique to the cases, including the defendant's prior criminal record, if any, the defendant's role in the offenses, and the characteristics of the violations. In all cases the sentences will not exceed the statutory maximum and in most cases it will be less than the maximum.
A charge is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.