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Victoria trader wanted in $200 million fraud

The U.S. Attorney’s office has issued an arrest warrant for Victoria stock trader Colin Heatherington relating to a $200 million securities fraud.

Documents filed in U.S. District Court in California said Heatherington and his co-conspirators are charged with committing securities fraud, wire fraud and with conspiring to commit securities and wire fraud. According to a sworn affidavit from special agent Elliot Manegold of the FBI’s complex financial crimes squad in Los Angeles in support of the arrest warrant, Heatherington and his co-conspirators perpetrated securities fraud by manipulating penny stocks to artificially increase the profitability of various hedge funds managed by Absolute Capital Management Holdings.

The conspirators also sold their own holdings of the funds at the inflated price. According to Manegold’s statement, the result of the scheme meant a $200 million loss for investors, while Heatherington pocketed $11.6 million.

One of Heatherington’s co-conspirators, Florian Homm, founder and former chief investment officer with Absolute Capital, had been on the run since 2007 and was arrested in March in Italy by Italian officials.

The U.S. has begun extradition proceedings to have Homm returned to the U.S.

Heatherington, who was based in Palma de Mallorca, Spain during the time of the fraud, is described by Manegold as a trader and close associate of Homm, and is also described as the one who “generally gave the directions as to the manipulative trades.”

“On behalf of the United States Attorney, I can say that we intend to pursue his extradition to the United States to face these charges with all deliberate speed,” Keri Axel, assistant U.S. attorney, said in an email.

The allegations have not been proved in court.

According to court documents, the U.S. Attorney believes Heatherington is living in Victoria. U.S. officials are working to have him arrested and brought to California.

The documents also show the U.S. Attorney’s office believes Heatherington is a serious flight risk and has requested Heatherington be detained pre-trial once he is brought to the U.S.

The wire fraud charge carries a maximum penalty of 20 years in prison, while the securities charges carry a maximum of 25 years. The conspiracy charge carries a maximum penalty of five years in federal prison.

http://www.timescolonist.com/news/victoria-trader-wanted-in-200-million-fraud-1.664890