Guy Gentile, a 39-year-old who grew up in Mount Vernon and, who operates a registered brokerage firm in Carmel, was indicted in federal court in Newark, N.J., on charges of securities fraud last week, the SEC complaint said.
Penny stocks are common stocks that are valued at less than one dollar and are, therefore, highly speculative.
According to the SEC complaint, the pump-and-dump scams generated more than $17 million in illegal proceeds and "substantial profits" for participants.
The indictment alleges that Gentile and co-conspirators bought shares of Raven Gold Corp., a purported gold and silver exploration company, and Kentucky USA Energy Inc., a natural gas production company, then inflated those shares through manipulative trading.
The indictment said they also provided illegal kick-backs and used glossy “newsletters” with fake publication names like “Stock Trend Report” and “Global Investor Watch” to promote the two companies.
The “newsletters” purposefully misled investors with positive – but phony – price and volume trends for these stocks, the SEC said.
The materials also contained false information about the promoters’ identity, how much they were compensation, and control of the stock, the SEC said.
According to the SEC, most of the so-called market activity was actually generated by Gentile and his associates who “controlled large blocks of the companies’ stocks.”
The SEC also said that those associates -- Adam S. Gottbetter, a New York City securities lawyer, and two Canadian stock promoters, Itamar Cohen and Mike Taxon -- were indicted last year for their roles in the schemes.
According to Bloomberg.com, Cohen and Taxon have pleaded guilty in the Raven Gold and Kentucky USA schemes.
Gottbetter also settled with the SEC for his role in the Kentucky USA scam, according to the SEC.
If Gentile is convicted, he could face up to 20 years behind bars.
The SEC said it is seeking repayment of the alleged schemes’ “ill-gotten gains,” fines, injunctions against future violations, and a bar against participating in penny stock offerings.
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