04/16/2009 3 REDACTED VERSION of 2 Indictment by USA as to Defendant Sealed. (rpg) (rpg). (Entered: 04/22/2009)
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Doc 3
OCR extract
INDICTMENT
At all times material to this Indictment:
1. Matthew W. Brown was a natural person with a mailing address in Aliso Viejo, California.
2. Tetrix Financial, Inc. ("Tetrix Financial") was a Delaware corporation formed in or about January 2006 and owned by P.D., a separately indicted co-conspirator.
3. The United States Securities and Exchange Commission ("the SEC") was an independent agency of the United States charged by law to protect investors by regulating and monitoring, among other things, the trading of Over-The-Counter securities, including so-called "penny stocks," that are quoted on the Pink Sheets, www.pinksheets.com and on the OTC Bulletin Board, www.otcbb.com.
COUNT 1
The GH3 Conspiracy
4. At all material times, GH3 International, Inc. (stock ticker: GHTI) ("GH3") was a Nevada corporation. GH3 purported to be in the business, inter alia, of marketing anti-aging cream and of offering anti-aging therapy treatments in clinics throughout the United States.
5. At all material times, GH3's common stock was registered with the SEC and was publicly quoted on the Pink Sheets, www.pinksheets.com. Shares of GH3 constituted "securities" within the meaning of the federal securities laws.
6. From in or about September 2006 through in or about February 2007, in the District of Delaware and elsewhere, MATTHEW W. BROWN, defendant herein, did conspire and agree with P.D., J.M., M.R. and J.C., separately indicted co-conspirators, along with others known and unknown to the grand jury to commit an offense against the United States, that is, to willfully and knowingly, directly and indirectly, by use of the means and instrumentalities of interstate commerce, use and employ manipulative and deceptive devices and contrivances, in violation of Title 17, Code of Federal Regulations, Section 240.10b-5, by: (a) employing devices, schemes, and artifices to defraud; (b) making or causing to be made untrue statements of material fact and omitting or causing to be omitted statements of material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and (c) engaging in acts, practices, and courses of business which operated and would operate as a fraud and deceit upon any person, in connection with the purchase and sale of a security, in violation of Title 15, United States Code, Sections 78j(b) and 78ff, and Title 17, Code of Federal Regulations, Section 240.10b-5.
Manner and Means
7. It was a part of the conspiracy that defendant MATTHEW W. BROWN and P.D., J.M., J.C. and M.R., along with others known and unknown to the grand jury, sought to artificially inflate market demand for GH3 shares by manipulating sales in GH3 stock in a way that appeared to be the product of free and fair market forces. They did this in various ways, including the following:
a. Issuing hundreds of millions of non-registered shares into the marketplace through the misuse of SEC Rule 504 of Regulation D, which generally exempts from registration shares issued in a private placement to an accredited investor, which shares the investing public did not know existed;
b. Orchestrating, coordinating, and timing their trading activity to create the false impression of increased market demand for, and liquidity in, GH3 stock;
c. Engaging in manipulative and deceptive securities transactions to artificially increase the demand for GH3 shares;
d. Posting messages on on-line message boards regarding GH3 stock; and
e. Coordinating trading activity with the issuance of GH3 press releases containing false and misleading information;
Overt Acts
8. In furtherance of the conspiracy and to accomplish its objects, defendant MATTHEW W. BROWN and P.D., J.M., J.C., and M.R. and others known and unknown to the grand jury, committed the following overt acts, among others, in the District of Delaware and elsewhere:
h. On or about December 6, 2006, defendant BROWN and P.D. communicated via instant message about the terms of the GH3 deal.
i. Between on or about December 6 and December 13, 2006, P.D. and others known and unknown to the grand jury purchased shares of GH3, thereby increasing market volume in GH3 stock.
j. On or about December 7, 2006, defendant BROWN communicated via instant message with P.D. regarding P.D.'s posting of messages concerning GI-3's stock on IHUB internet message boards.
k. On or about December 7, 2006, defendant BROWN communicated via instant message with P.D. regarding future GH3 press releases.
1. On or about December 7 and 8, 2006, GH3 issued press releases claiming that the company's revenues for 2005 and 2006 exceeded $2.1 million and $3 million,
respectively.
m. On or about December 7, 2006, P.D. communicated via instant message with N.M. asking N.M. to post on internet message boards that there was a "short" in GH3 stock.
n. On or about December 7, 2006, defendant BROWN communicated via instant message with P.D. wherein P.D. told defendant BROWN to have GH3 issue another press release indicating that GH3 had ordered a non-objecting beneficial owners ("NOBO") list from its transfer agent to address unexplained short positions in GH3 stock and suggesting language for that press release.
o. On or about December 8, 2006, GH3 issued a press release about ordering a NOBO list, using some of the language suggested by P.D. in the December 7, 2006 instant message.
p. On or about December 11, 2006, GH3 issued yet another press release anticipating that the company's revenues for 2007 would exceed $6,000,000, a 100% increase over 2006 revenues.
q. Between December 4 and December 14, 2006, P.D. and other co-conspirators known and unknown to the grand jury had access to J.C.'s brokerage accounts at Spartan and Bishop Rosen, directed sales of GH3 shares out of the accounts, and controlled the timing of sales of GH3 shares from those brokerage accounts. All in violation of Title 18, United States Code, Section 371.
COUNT 2
9. Paragraphs 1 through 8 are incorporated herein by reference.
10. From in or about September 2006 through in or about February 2007 in the District of Delaware and elsewhere, MATTHEW W. BROWN, defendant herein, willfully and knowingly, by the use of the means and instrumentalities of interstate commerce, directly and indirectly, used and employed manipulative and deceptive devices and contrivances, and aided and abetted the use and employment of manipulative and deceptive devices and contrivances, in violation of Title 17, Code of Federal Regulations, Section 240.10b-5, by: (a) employing devices, schemes, and artifices to defraud; (b) making or causing to be made untrue statements of material fact and omitting or causing to be omitted statements of material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and (c) engaging in acts, practices, and courses of business which operated and would operate as a fraud and deceit upon other persons in connection with purchases and sales of GH3 stock.
In violation of Title 15, United States Code, §§ 78j(b) and 78ff, Title 17, Code of Federal Regulations, § 240.10b-5, and Title 18, United States Code, § 2.
COUNT 3
11. Paragraphs 1 through 10 are incorporated herein by reference.
12. From in or about September 2006 through in or about February 2007, in the District of Delaware and elsewhere, MATTHEW BROWN, defendant herein, having devised and intending to devise a scheme and artifice to defraud, as set forth in paragraphs 1 through 10 above, and to obtain money and property by means of false and fraudulent pretenses, representations, promises, and the concealment of material facts, caused the issuance of a false and misleading press release to the general public concerning the purported activities of GH3 regarding a NOBO list for the purposes of executing such scheme and artifice and attempting to do so, and did transmit and cause to be transmitted by means of wire communication in interstate commerce a communication, to wit, a December 7, 2006 communication from screen name "mattbrownfl" to "PDYNK15" to via the instant messaging functionality of America OnLine in furtherance of this scheme and artifice to defraud, in violation of 18 U.S.C. §§ 1343 and 2.
COUNT 4
13. Paragraphs 1 through 10 are incorporated herein by reference.
14. From in or about December 2006 through in or about February 2007, in the District of Delaware and elsewhere, MATTHEW W. BROWN, defendant herein, did knowingly conspire with separately indicted co-conspirators P.D., J.M., J.C., and M.R., and with additional persons, known and unknown to the grand jury, to commit an offense against the United States, that is, laundering of monetary instruments in violation of Title 18, United States Code, Sections 1956(a)(1); that is, MATTHEW W. BROWN did knowingly conspire with P.D., J.M., J.C. and M.R., and with persons known and unknown to the grand jury to conduct financial transactions affecting interstate and foreign commerce - to wit, the movement in the national banking system of the proceeds from the public sale of securities- which property involved the proceeds of specified unlawful activity - i.e., violations of Title 15, United States Code, Sections 78j(b) and 78ff, Title 17, Code of Federal Regulations, Section 240.10b-5 (securities fraud) and 18 U.S.C. Section 371 (conspiracy to commit securities fraud), and 18 U.S.C. Section 1343 (wire fraud) as set forth in paragraphs 1 through 12 of this Indictment, incorporated herein - knowing that the transactions were designed in whole and in part to conceal and disguise the nature, location, source, ownership, and control of the property constituting the proceeds of specified unlawful activity; and that while conducting and attempting to conduct such financial transactions, knew that the property involved in the financial transactions constituted the proceeds of specified unlawful activity.
Manner and Means
15. It was a part of the conspiracy that defendant BROWN and P.D., J.M., J.C. and M.R. along with others known and unknown to the grand jury, sought to conceal and disguise both the co-conspirators' participation in the underlying fraud and the nature, source, ownership, and control of the proceeds obtained through that fraud. They did this in various ways, including laundering the proceeds of the sales of GH3 stock through various co-conspirators' personal and business accounts and converting a sizable portion of the securities fraud proceeds into cash.
Overt Acts
16. In furtherance of the conspiracy, MATTHEW W. BROWN, defendant herein, and P.D., J.M., J.C. and MR., along with others committed and caused to be committed the following overt acts, among others, in the District of Delaware and elsewhere:
a. On or about December 14, 15, and 18, 2006, proceeds from the sales of GH3 shares were sent from J.C.'s brokerage account at Bishop, Rosen to J.C.'s Wells Fargo bank account xxxxxx-8336.
b. On or about December 13, 15, and 19, 2006, proceeds from the sales of GH3 shares were sent via wire transfer from J.C.'s brokerage account at Spartan Securities to J.C.'s Wells Fargo Bank account xxxxxx-8336.
c. On or about December 15, 18 and 19, 2006, approximately $253,000 was sent via wire transfer and check from J.C.'s Wells Fargo Bank account xxxxxx-8336 to a Bank of America account xxxxxx-2508 in the name of Westmark Capital Group, Inc. ("Westmark").
d. On or about December 21, 2006, $60,000 in cash was withdrawn by M.R. from Westmark's Bank of America account xxxxxx-2508.
e. On or about January 8, 2007, $80,000 in cash was withdrawn by M.R. from Westmark's Bank of America account xxxxxx-2508.
f. On or about January 19, 2007, $80,000 in cash was withdrawn by M.R. from Westmark's Bank of America account xxxxxx-2508.
g. In or about January 2007, M.R. delivered to J.M. approximately $220,000 in cash proceeds from the sale of GH3 shares, a portion of which proceeds were ultimately intended for defendant BROWN and P.D.
h. In or about January 2007, D.W. was hired by defendant BROWN and P.D. and D.W. was paid $10,000 to drive approximately $146,000 in cash proceeds from the GH3 deal from California to P.D. in Newark, Delaware.
All in violation of Title 18, United States Code, Section 1956(h).
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Next: Count 5
The Asia Global Conspiracy
