South Florida Stock Promoters Charged with Securities Fraud in Relation to Pump and Dump Stock Manipulation Scheme
Two South Florida stock promoters have been charged in connection with a $1 million pump and dump securities fraud scheme involving the shares of Valentine Beauty, Inc. (“VLBI”).
Benjamin G. Greenberg, United States Attorney for the Southern District of Florida, and Robert F. Lasky, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, made the announcement.
Eddy Ubaldo Marin, 56, of Ft. Lauderdale, Florida, was charged by a criminal information with one count of securities fraud, in violation of Title 15, United States Code, Sections 78(j)(b) and 78ff(a), and Title 17, Code of Federal Regulations, Section 240.10b-5 in Case No. 18-CR-20354. Marin faces a maximum statutory sentence of up to 20 years in prison and a fine up to $5 million. The case is assigned to U.S. District Judge Darrin P. Gayles in Miami. Shane R. Spierdowis, 27, formerly of Boca Raton, Florida, was charged by separate criminal information with one count of conspiracy to commit securities fraud, in violation of Title 18, United States Code, Section 371 in Case No. 18-CR-20355. Spierdowis faces a maximum statutory sentence of up to 5 years in prison and a fine up to $250,000 or double the gross proceeds of the offense. The case is assigned to U.S. District Judge Ursula M. Ungaro in Miami.
According to the court docket, including allegations made in the charging documents, VLBI was a beauty supply company with operations in Sunrise, Florida, that marketed its products on television infomercials and elsewhere. Shares of VLBI stock were publicly traded and quoted over the counter on OTC Link. In approximately November 2013, Marin and certain other accomplices arranged to secretly obtain a controlling interest in VLBI stock by issuing shares to certain third parties, including Green Tree Capital, Inc., a company controlled by Marin, based in Ft. Lauderdale, Florida. In March and April, 2014, Marin arranged to transfer a substantial number of shares into accounts controlled by Spierdowis and other co-conspirators. Marin was a convicted felon and, according to court documents, attempted to conceal his role in the scheme by keeping his name off of corporate documents. Marin also arranged to obtain false and fraudulent legal opinion letters so that the shares he controlled could be falsely classified as “free trading” rather than restricted.
Thereafter, beginning in approximately May 2014 and continuing through in or around September 2014, Marin, Spierdowis and others allegedly arranged for VLBI to issue press releases, while also using internet marketing and penny stock newsletters to tout VLBI stock. Spierdowis would then use one company to trade VLBI shares, while using a separate company to conduct internet marketing activities, to avoid association with the pump and dump stock manipulation and cause the issuance of marketing newsletters and other email marketing. These efforts were intended to artificially increase the trading volume and price of VLBI shares, so that Marin, Spierdowis and their co-conspirators could sell shares at a profit. During the conspiracy period, the conspirators sold approximately $1 million worth of VLBI shares to the investing public.
In approximately June 2014, Marin began a term of federal imprisonment due to a different federal offense, and was ultimately incarcerated at FCI Miami. While at FCI Miami, Marin was allegedly visited by Spierdowis on various occasions and during these visits the defendants coordinated the sale of VLBI shares and discussed activites related to other stocks.
According to court documents, in or around April 2015, after Marin was released from federal custody he, along with Spierdowis and their co-conspirators, planned to conduct a reverse merger of VLBI into another entity, change the name, and retain secret control of the company.
The conspirators continued to sell shares of VLBI until approximately April 26, 2016, when trading in VLBI shares was suspended by the U.S. Securities and Exchange Commission (SEC).
Today, a parallel civil enforcement action was filed by the SEC in the Southern District of Florida against Marin and Spierdowis in connection with the VLBI pump and dump manipulation scheme.
A criminal information is a charging instrument containing allegations. Every defendant is presumed innocent unless and until found guilty in a court of law.
Mr. Greenberg commended the investigative efforts of the FBI in this matter. Mr. Greenberg also thanked the SEC’s Miami Regional Office for their assistance. This case is being prosecuted by Assistant U.S. Attorney Jerrob Duffy.