NEW YORK– Sandy Winick, from Stoney Creek Ontario Canada, is alleged to have “Masterminded” a plot that bilked $140 Million from investors in Asia, Europe and North America. The scheme, involving penny stocks sold through call centres, was staged by four Canadians and carried out with the help of five Americans, took place starting in 2008, U.S. authorities said.
The suspected mastermind of one of the largest penny stock fraud cases in history allegedly created shell corporations, used burner cell phones, conducted business across continents and operated under aliases like “Jerry Sarrano” and “Robin Cheer.”
Winick, 55, is believed to be hiding out in Thailand and is said to have worked out of China, Vietnam and the U.S., in addition to his native Canada.
The complex scheme, which involved pumping up the prices of worthless penny stocks and then unloading them on unsuspecting victims in as many as 35 countries, allegedly raked in more than $140 million (U.S.), the Federal Bureau of Investigation said Tuesday.
The U.S. Justice Department said seven suspects were arrested Tuesday in New York, Arizona, New Jersey, Florida, California and Ontario. However, Canadians Gregory Curry, 63, and alleged mastermind Sandy Winick, 55, of Stoney Creek remain at large.
“By his own admission we know that Sandy Winick is in Bangkok, Thailand,” Robert Nardoza, a public affairs officer for the U.S. Attorney’s Office, told the Star. He declined to comment on Curry’s whereabouts.
“We’re working with our partners to bring these individuals back to New York to face charges,” Nardoza said.
Four Canadians and five Americans are indicted on 24 charges, including securities fraud, wire fraud and false personation of Internal Revenue Service employees, according to a statement from the office of U.S. Attorney Loretta Lynch in Brooklyn.
Two of the Canadian suspects — Gregory Ellis, 46, and Kolt Curry, 38 — have already been arrested. Kolt Curry is the son of Gregory Curry.
The American suspects are Gary Kershner, 72, Joseph Manfredonia, 45, Cort Poyner, 44, Songkram Roy Sahachaisere, 43, and William Seals, 51.
If convicted, the accused could face up to 20 years of imprisonment for each count of conspiracy to commit wire fraud, wire fraud and securities fraud, as well as up to five years for conspiracy to commit securities fraud. The false personation charge could carry a three-year prison sentence.
Lawyers for the accused could not be reached immediately for comment.
The Justice Department said the arrests are the result of an investigation carried out over several years by the FBI and RCMP.
According to the U.S. Attorney’s office statement, the “pump and dump” scheme involved fraudulently inflating (“pumping up”) the share prices and the trading volumes of certain penny stocks and then “dumping” billions of essentially worthless shares on investors.
The indictment says the accused also operated a so-called “advance fee” scheme. They set up bogus call centres from which they would induce investors to pay fees up front for help in finding buyers for their shares in unattractive penny stocks. These services turned out to be non-existent.
“Where others saw citizens of the world, the defendants saw a pool of potential marks,” Lynch, the U.S. Attorney, said in a statement.
The indictment alleges both schemes — the “pump and dump” and the “advance fee” — were orchestrated by Winick, a native of Stoney Creek, Ont., who has lived in China, Thailand, Vietnam and the United States.
Canadian and U.S. authorities say his aliases include “Robin Cheer,” “Abdiel Vergara,” and “Jerry Sarrano.”
The indictment says the other Canadians charged in the case were primarily involved in running the fake services scheme.
Between January 2009 and July 2013, the men allegedly created a series of shell companies intended to convince unsuspecting investors that the Canadians were brokers who could sell their “nearly worthless” penny stocks for a profit, according to the indictment.
Posing as employees of these made-up companies, the men allegedly used call centres in Vietnam, Thailand and Canada to solicit business from clients as far afield as Kuwait, Panama and Singapore.
At times, they allegedly impersonated employees of the Internal Revenue Service — the U.S. tax collection agency — which is a crime under U.S. law.
The Canadians allegedly charged commissions and bogus regulatory fees in return for helping investors sell their stocks. But once they had been paid, the conspirators performed no services whatsoever, the indictment says.
In total, Ellis and the Currys stole $20 million from their victims through the scheme, according to a detention letter filed in a Brooklyn court Tuesday.
In one intercepted phone call, a partial transcript of which the U.S. Attorney released Tuesday, Kolt Curry can be heard boasting, “I had a guy send me a million dollars over one phone call … He actually sent me almost $2 million over the period of the hit. … I guess in the industry they coin it as a smash and grab.”
During another conversation captured on a phone tap and published by the U.S. Attorney, Kolt Curry discusses his plans for opening a call centre in New York: “I tell you what, man … hitting the Americans would be like taking money from a baby.”
Kolt Curry, a native of Aurora, Ont., was arrested a hotel in Garden City, N.Y. He was allegedly on his way to set up a fake call centre in Brooklyn.
The U.S. Attorney’s office, arguing that he’s a flight risk, obtained a court order Tuesday barring bail for Curry. He is being held in a Brooklyn jail.
In April, 2011, the Ontario Securities Commission issued a cease-trade order against a group of respondents that included Winick and the two Curries in connection with companies called BFM Industries and Liquid Gold International Corp.
“The BFM and Liquid Gold schemes I find to be entirely fraudulent. The activities involved in the schemes include unregistered trading and illegal distributions,” OSC commissioner James Carnwath wrote in his decision in the case, dated Aug. 7.
The OSC is slated to deliver its decision on sanctions and costs on Sept. 12.
In 2010, the U.S. Securities and Exchange Commission won a default judgment against Winick after he failed to respond to a complaint accusing him of creating dozens of shell companies under a public company he controlled, First Canadian American Holding Corp., later known as Blackout Media Corp.
The SEC accused Winick of creating 59 subsidiaries in Blackout with no legitimate business purpose other than to sell unregistered shares in the companies and pocket the proceeds.
According to court documents, he was ordered in 2012 to disgorge $3.2 million in ill-gotten gains and was permanently barred from the penny stock market, among other penalties.
Blackout is among several companies mentioned in Tuesday’s indictment.