![](http://investorshub.advfn.com/images/default_ih_profile2_4848.jpg?cb=0)
Thursday, June 30, 2011 3:34:39 PM
Thu Jun 30, 2011 2:45pm EDT
* CEOs charged with conspiring to manipulate stock prices
* One defendant enters plea agreement -- lawyer
By Jonathan Stempel
NEW YORK, June 30 (Reuters) - Three chief executives and two stock promoters were criminally charged with engaging in fraudulent penny stock schemes, after a probe that involved undercover FBI agents, federal investigators said on Thursday.
The U.S. Department of Justice said the executives charged include Donald Klein, 40, of KCM Holdings Corp (KCMH.PK); Douglas Newton, 66, of Real American Capital Corp (RLABD.PK); and Thomas Schroepfer, 54, of Smokefree Innotec Inc (SFIO.PK).
Also charged were Charles Fuentes, 66, accused of promoting Smokefree stock; and Brian Gibson, 63, accused of promoting stock of Xtreme Motorsports International Inc (XTMM.PK).
Each defendant was charged with conspiracy to defraud the investing public and faces a maximum of five years in prison plus fines.
The U.S. Securities and Exchange Commission also filed civil fraud charges against the defendants. The charges were brought in the U.S. District Court for the Southern District of Florida.
Investigators said the defendants manipulated the shares of thinly-traded companies that traded on the Pink Sheets.
Most of the schemes involved kickbacks to a purportedly corrupt pension fund or a broker who agreed to buy shares, while Gibson's scheme involved the alleged creation of a fake website to tout Xtreme stock, the SEC said.
According to the SEC, one example of FBI involvement was when an agent, posing as a corrupt pension fund trustee, met with Newton and agreed to buy Real American stock in exchange for a 30 percent kickback.
A day later, the FBI wired funds to Real American's Billy Martin's USA affiliate, which then issued a check to a bogus consulting firm set up to conceal the kickback, the SEC said.
"Investors deserve better than secret investment strategies based on kickbacks and bribes," SEC enforcement chief Robert Khuzami said in a statement. "These CEOs got more than they bargained for but exactly what they deserved."
Jeffrey Cox, a lawyer for Klein, said his client entered a plea agreement in his criminal case. The other defendants' lawyers were not immediately available to comment on their behalf. (Reporting by Jonathan Stempel, editing by Gerald E. McCormick)
Recent RLAB News
- Fight Card Announcement Sends Shares Soaring • AllPennyStocks.com • 03/14/2024 07:37:00 PM
Mass Megawatts Announces $220,500 Debt Cancellation Agreement to Improve Financing and Sales of a New Product to be Announced on July 11 • MMMW • Jun 28, 2024 7:30 AM
VAYK Exited Caribbean Investments for $320,000 Profit • VAYK • Jun 27, 2024 9:00 AM
North Bay Resources Announces Successful Flotation Cell Test at Bishop Gold Mill, Inyo County, California • NBRI • Jun 27, 2024 9:00 AM
Branded Legacy, Inc. and Hemp Emu Announce Strategic Partnership to Enhance CBD Product Manufacturing • BLEG • Jun 27, 2024 8:30 AM
POET Wins "Best Optical AI Solution" in 2024 AI Breakthrough Awards Program • POET • Jun 26, 2024 10:09 AM
HealthLynked Promotes Bill Crupi to Chief Operating Officer • HLYK • Jun 26, 2024 8:00 AM