Siga Resources confirmed as pump and dump scam in FBI investigation:
"From jail, promoter pleads guilty to securities fraud
Vancouver's Louis Dion could avoid extended sentence if he helps FBI catch other conspirators
By David Baines, Vancouver Sun March 14, 2012 1:10 AM
Vancouver stock promoter Louis Dion, who has been languishing in a Brooklyn jail since he was arrested on Dec. 1, has pleaded guilty to one count of securities fraud. He will be sentenced Tuesday.
The sequence of events that trans-formed the 61-year-old promoter from Howe Street stock hustler to U.S. stock felon makes an interesting case study.
It started in the summer of 2009, when I reported that securities lawyer Faiyez Dean, who maintains offices in Seattle and Vancouver, had helped a dozen dubious business ventures - all connected to Russian and Ukrainian nationals - go public on the OTC Bulletin Board in the United States.
One of those companies was Plethora Resources Inc. Its stated purpose was to advise North American companies on Siberian oil and gas lease deals, but it was obviously not an earnest business. It had no revenues, its total assets were only $24,207 and its president, Artur Etezov, worked as a banker in Ukraine and had no technical experience in oil and gas exploration.
"There is method in this madness," I wrote on July 18, 2009. "The real purpose is to create a shell company whose shares are tightly held and, therefore, easily manipulated. This makes them perfect vehicles for future 'pump and dump' stock schemes."
Sure enough, after Plethora's shares were registered for trading, the company dropped its oil-and-gas consulting business and acquired Sync2 International Ltd., a Malta-registered company that owned Sync2 Agency Ltd., a Vancouver company that was in the business of website development.
Plethora changed its name to Sync2 Networks Corp., and the stock jumped to $2.70, giving the company a total stock market value of about $230 million.
"This is a totally artificial value," I wrote at the time. "No statements have been released for the acquired company, so how much it is really worth is pure conjecture."
Little did I know, but Dion was the person behind Sync2's spectacular price rise. The FBI knew, though. Within days, their agents would ensnare Dion in a sting operation.
As described in an information filed by U.S. Attorney Loretta Lynch on Feb. 29, Dion and several unnamed co-conspirators orchestrated a classic "pump-and-dump" scheme from August 2009 to December 2011.
First, they acquired control of Sync2 stock at little or no cost. To conceal their control, they deposited the shares into multiple accounts at different brokerage firms in the names of nominee entities, some located offshore.
Then they engaged in "carefully-timed mass promotion campaigns" to create market interest. These included email blasts, social networking sites and newsletters that predicted a dramatic increase in the stock price.
At the same time, they traded their shares back and forth between their accounts to create the appearance of active interest in the stock.
Then they offered secret commissions to stockbrokers who placed buy orders for their clients, and to market makers who brought liquidity to the market. That enabled Dion and his cronies to dump their shares into the market.
Finally, they wired the proceeds to various bank accounts, including some outside the United States, once again in nominee names, then remitted the net proceeds to the conspirators.
Lynch also alleged that Dion similarly manipulated the share price of another bulletin board company called Siga Resources Inc.
In that scheme, she alleged, Dion agreed to pay a person identified as John Doe, who supposedly had access to a network of corrupt brokers, half the value of any sales he arranged.
Citing specific acts to further the scheme, Lynch alleged that on Nov. 21, 2011, Dion wired $10,000 to a bank account opened by John Doe in Queens, N.Y., and on Nov. 28, wired another $36,000 into the account.
Finally, on Dec. 1, Dion travelled from Canada to New York to meet "John Doe" and discuss the Siga manipulation scheme. That proved to be Dion's undoing: he was immediately arrested and tossed into a cell at the Metropolitan Detention Centre in Brooklyn. He's been there ever since.
Lynch's information, which describes a single count of stock fraud, was clearly the product of a plea bargain. The same day it was filed with the court, Dion pleaded guilty to the charge.
This type of offence customarily attracts serious jail time in the United States. But if this case follows the usual pattern, Dion will be able to mitigate his sentence by helping the FBI finger other conspirators.
The only sad part of this story is that the jail term will have a finite term, which means Dion will eventually be released and return to Vancouver where, if history repeats itself, he will continue to work behind the scenes on dodgy stock deals that primarily benefit him and his buddies.
dbaines@vancouversun.com
© Copyright (c) The Vancouver Sun
Read more: www.vancouversun.com/From+jail+promoter+pleads+guilty+securities+fraud/6298850/story.html#ixzz1p51EoTzK"
