New York Man Indicted In $17 Million Microcap Stock Manipulation Scheme
NEWARK, N.J. – A federal grand jury today indicted the owner of a registered broker-dealer in New York for orchestrating a stock market manipulation scheme that artificially inflated the stock price of two publicly traded companies, U.S. Attorney Paul J. Fishman announced.
Guy Gentile, 39, of Putnam Valley, New York, is charged by indictment with one count of conspiracy to commit securities fraud and one count of securities fraud.
According to the indictment:
From April 2007 through June 2008, Gentile and others allegedly engaged in an extensive “pump-and-dump” stock manipulation scheme to fraudulently inflate the prices of shares of certain companies in order to later sell those shares at artificially inflated prices. Gentile was the founder and owner of a registered broker-dealer based in New York. The scheme involved two public companies: Raven Gold Corporation (RVNG) and Kentucky USA Energy Inc. (KYUS).
Gentile and his conspirators first obtained control over large blocks of the free trading shares of the two target companies. They allegedly “pumped” the price of those shares by engaging in manipulative trading of the stocks and disseminating misleading promotional materials touting the stocks and encouraging others to purchase them. After pumping the stocks, Gentile and his conspirators “dumped” them, selling large volumes of the stock to investors. The companies’ stock prices then dropped, causing the victims of the scheme to suffer losses. The alleged stock manipulation scheme generated approximately $17.2 million in gross trading proceeds.
The conspiracy count with which Gentile is charged carries a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gain or loss from the offense. The securities fraud count carries a maximum potential penalty of 20 years in prison and a $5 million fine.
The charges and allegations in the indictment are merely accusations, and the defendant is considered innocent unless and until proven guilty.
The U.S. Securities and Exchange Commission (SEC) is filing a civil complaint against Gentile today.
On May 27 and 28, 2015, Itamar Cohen, 53, and Michael Taxon, 52, stock promoters from Ontario, Canada, each pleaded guilty before U.S. District Judge Jose L. Linares to one-count informations charging them with conspiracy to commit securities fraud for their involvement in the scheme.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, for the investigation leading to today’s indictment. He also thanked the U.S. Securities and Exchange Commission’s New York Regional Office, under the direction of Andrew Calamari, for its assistance in this matter.
The government is represented by Assistant U.S. Attorney Nicholas P. Grippo of the U.S. Attorney’s Office Economic Crimes Unit in Newark.
Defense counsel: Joseph Tacopina Esq. and Chad Siegel Esq., New York