Hydrogen Hybrid Technologies Inc (HYHY)

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Ex-Broker From Canada Indicted in $26 Million Fraud (Update2)

By Sophia Pearson
http://www.bloomberg.com/apps/news?pid=20601082&sid=aXUyz3XLJGNk&refer=canada#

Feb. 12 (Bloomberg) -- A former stock broker from Canada was indicted for manipulating the shares of four companies trading over the counter in a $26 million fraud ring, U.S. prosecutors said.

George Georgiou, 39, of Ontario, was charged with conspiracy, securities fraud and wire fraud, Philadelphia Acting U.S. Attorney Laurie Magid said today in a statement. Georgiou and others artificially inflated the prices of shares in Neutron Enterprises Inc., Avicena Group Inc., Hydrogen Hybrid Technologies Inc. and Northern Ethanol Inc., according to the indictment.

"This fraud attacks the credibility of our financial markets at a time when individual investors have already suffered great losses," Magid said.

U.S. regulators are using undercover informants and FBI agents to crack down on stock manipulators. On Dec. 15, Magid and the Securities and Exchange Commission's Philadelphia office accused seven people of paying kickbacks in a series of separate schemes to inflate stock prices in companies including National Lampoon Inc., maker of the 1978 fraternity comedy movie "Animal House."

House Arrest

Georgiou is under house arrest in the U.S. after he allegedly agreed to pay an undercover FBI agent a kickback to bribe brokers to purchase $10 million worth of Northern Ethanol stock, according to the statement.

"Mr. Georgiou denies the government's allegations and is looking forward to the opportunity to defend himself in court," Catherine M. Recker, Georgiou's lawyer, said in a statement. "We expect that he will be vindicated."

Georgiou, who was a registered investment professional until he was banned as a broker in 1995, worked with others in the U.S., Canada, the Turks and Caicos Islands and the Bahamas, according to the statement. The group sold stocks when they reached an artificially inflated price and used those values as collateral to obtain loans in brokerage accounts at two Bahamian firms, Magid said in the statement.

The firms were forced to liquidate when they were left with virtually worthless stocks, Magid said.

The SEC said today in a statement that it sued Georgiou in federal court in Philadelphia. The commission temporarily halted trading in the four companies today. The suspension expires on Feb. 26, according to the SEC statement.

Georgiou faces as much as 165 years in prison and a $21 million fine if convicted of all charges.

The case is U.S. v. Georgiou, U.S. District Court, Eastern District of Pennsylvania (Philadelphia).

To contact the reporter on this story: Sophia Pearson in Wilmington, Delaware [e-mail]
Last Updated: February 12, 2009 17:35 EST

http://www.bloomberg.com/apps/news?pid=20601082&sid=aXUyz3XLJGNk&refer=canada#