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Eight Charged by N.Y. in $290 Million Pump-and-Dump Plot

By Chris Dolmetsch
September 11, 2014 3:24 PM EDT
http://mobile.bloomberg.com/news/2014-09-11/eight-charged-by-n-y-in-290-million-pump-and-dump-plot.html

Eight people were indicted on charges of defrauding thousands of investors in penny stocks through a $290 million “pump-and-dump” scheme, Manhattan District Attorney Cyrus Vance Jr. said.

Three stock promoters -- Anthony Thompson, 38, Eric Van Nguyen, 30, and Jay Fung, 40 -- are accused of working with five others from April 2009 to May 2012 to drive up prices of penny stocks to induce investors to buy shares, Vance said in a statement today.

The eight used “their positions as stock promoters and company insiders to inflate their own profits through fraud and deceit,” he said in announcing an 85-count fraud and grand larceny indictment.

According to the indictment, the three promoters used websites they controlled, including OxofWallStreet.com and PennyPic.com, to send e-mails promoting penny stocks to thousands of investors.

They and the five others gained control of public shell companies with available shares and merged them with new, private entities, according to prosecutors. The corporate insiders then issued millions of shares to themselves, associates, friends and family to pump up prices, according to prosecutors.

Dumped Shares

The defendants issued press releases touting companies including Hydrogenetics Inc., Xynergy Holdings Inc. (XYNH), Blast Applications Inc., Blue Gem Enterprise Inc. (BGEM), Mass Hysteria Entertainment Co., Lyric Jeans Inc. (LYJN), Smart Holdings Inc. and Sunpeaks Ventures Inc., according to prosecutors. They allegedly sold shares as prices rose.

When the U.S. Securities and Exchange Commission began probing several of the companies in 2010, the promoters sought to conceal their ownership by having shares issued in the name of foreign corporations.

The others charged are Hanna Schmieder, 39, president of Lyric Jeans; Kenneth Oxsalida, 59, president of Smart Holdings; Joseph Dervali, 54; Luz Rodriguez, 47; and Christopher Balseiro, 31, prosecutors said.

Thompson, who lives in Maryland, pleaded not guilty today in New York Supreme Court in Manhattan.

To contact the reporter on this story: Chris Dolmetsch in New York State Supreme Court in Manhattan at

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To contact the editors responsible for this story: Michael Hytha at [e-mail] David Glovin, Charles Carter


http://mobile.bloomberg.com/news/2014-09-11/eight-charged-by-n-y-in-290-million-pump-and-dump-plot.html