SEC, US Attorney and FBI Announce 13 Charged in Connection with Securities Kickback Schemes

The SEC, U.S. Attorney for the District of Massachusetts and FBI today announced parallel cases filed in federal court against several corporate officers, lawyers and a stock promoter. The cases allege that the 13 defendants used kickbacks and other schemes to trigger investments in various thinly-traded stocks. The kickbacks, concealed by sham consulting agreements, were given to an investment fund representation for buying stock in specific companies. This representation was actually an undercover FBI agent.

These charges follow a year-long investigation focusing on preventing fraud in the micro-cap stock markets, which have become an increasingly common area for fraud and abuse. Microcap companies are small publicly traded companies whose stock often trades at pennies per share. As a result, many microcap companies do not file financial reports with the SEC, which makes it more difficult for investors to find information. In October 2010 and June 2011 similar cases were filed.

“The public has a right to invest in an honest and fair market. Companies that agree to pay illegal kickbacks harm investors and undermine fair competition in the markets,” said United States Attorney Carmen Ortiz. “Hard working Americans who invest their savings should not be subjected to backroom deals like those alleged today.”

SEC, US Attorney and FBI Announced 13 Charged in Connection with Securities Kickback Schemes