Principal of Offshore Brokerage Firm Sentenced in Miami to 20 Years in Prison for $7 Million Stock Manipulation Scam
Department of Justice
Office of Public Affairs
FOR IMMEDIATE RELEASE
Friday, May 11, 2012
http://www.justice.gov/opa/pr/2012/May/12-crm-617.html
WASHINGTON – The principal of a Costa Rican brokerage firm was sentenced today in Miami to 20 years in prison for his role in a stock manipulation scheme that defrauded investors in a company called CO2 Technologies, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Chief Postal Inspector Guy Cottrell of the U.S. Postal Inspection Service (USPIS) and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office.
Jonathan Curshen, 47, the principal of Red Sea Management and Sentry Global Securities, was sentenced by U.S. District Judge Richard W. Goldberg. Red Sea Management and Sentry Global Securities are companies located in San Jose, Costa Rica, that provided offshore accounts and facilitated trading in penny stocks.
In addition to his prison term, Curshen was sentenced to serve three years of supervised release and was ordered to forfeit approximately $7.3 million. Curshen and his co-defendant, Las Vegas stock promoter Nathan Montgomery, were convicted by a jury in January 2012 on all counts. Montgomery, 31, is scheduled to be sentenced by Judge Goldberg later today.
The evidence at trial showed that in January and February 2007, Curshen, of Costa Rica and Sarasota, Fla., and Montgomery, of Las Vegas, were involved in a scheme to illegally manipulate the stock price of CO2 Tech (ticker CTTD).
Evidence at trial showed that Curshen’s and Montgomery’s co-conspirators controlled the outstanding shares of CO2 Tech, which were used in the stock manipulation scheme. Montgomery and his conspirators engaged in coordinated trades in conjunction with the issuance of false and misleading press releases that were designed to artificially inflate the price of CO2 Tech shares to make it appear that it had significant business prospects. According to these press releases, CO2 Tech purported to have a business relationship with Boeing to reduce polluting gases emitted from airplanes, when in fact CO2 Tech never had any business or relationship with Boeing.
According to the evidence at trial, Montgomery and his co-conspirators, Robert Weidenbaum, Timothy Barham Jr., Ryan Reynolds and others fraudulently “pumped” the market price and demand for CO2 Tech stock through these press releases and coordinated trades of shares of CO2 Tech stock in order to create the appearance of legitimate buying interest by legitimate investors. The evidence showed that as Montgomery and his conspirators pumped the price of the stock, Curshen and his conspirators facilitated the “dumping” of shares through the trading desk at Red Sea and Sentry Global Securities by selling the shares to the general investing public. The evidence showed that these shares, which became virtually worthless, were purchased by unsuspecting investors, including investors in the Southern District of Florida. The evidence showed that Montgomery, Weidenbaum, Reynolds and Barham were paid approximately $1 million in cash by their conspirators to participate in sham stock trades of CO2 Tech. The cash was delivered to them in Miami via a private jet from an airport outside New York.
The evidence further showed that, from approximately 2003 through 2008, Curshen operated Red Sea as a money laundering hub in Costa Rica that established bank accounts and brokerage accounts in the United States and Canada under false pretenses and through nominee owners. The evidence further showed that Curshen and his co-conspirators laundered the proceeds of the stock fraud from accounts in the United States to an account in Canada, all in an effort to conceal and disguise the nature and source of the proceeds.
Stock promoters Barham and Weidenbaum were sentenced yesterday to 30 months and 26 months in prison, respectively. Michael Krome, a securities attorney from New York, who participated in the conspiracy and evaded federal securities registration requirements, was sentenced yesterday to 34 months in prison. Reynolds is scheduled to be sentenced at a later date.
The case was investigated by the FBI’s Washington Field Office and the USPIS. The case is being prosecuted by Trial Attorneys N. Nathan Dimock and Rina Tucker Harris of the Fraud Section in the Justice Department’s Criminal Division. The U.S. Attorney’s Office for the Southern District of Florida provided significant assistance in this case. The Department of Justice acknowledges the significant assistance of the Financial Industry Regulatory Authority (FINRA) and the U.S. Securities and Exchange Commission (SEC) in its investigation. The criminal case originated as a referral from the SEC, which has a pending parallel civil case. The Criminal Division’s Office of International Affairs and Costa Rican authorities also provided assistance.
The Department of Justice has established a website for potential victims of the crime, which may be accessed at www.justice.gov/criminal/vns/caseup/ , under case numbers 11-cr-20121 and 12-cr-20049. Potential victims are urged to contact the Department of Justice as directed on the website.
This prosecution is part of efforts under way by the Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
(So all you OFFSHORE scammers you are not untouchable)
