The indictment came after a two-year undercover investigation by the Federal Bureau of Investigation during which an undercover agent posing as a stock promoter traveled to Belize to meet with some of the alleged conspirators and set up offshore entities, according to court documents.
During subsequent recorded conversations, Mr. Bandfield explained to the agent that he had incorporated some 5,000 sham companies allowing clients to manipulate penny stock markets by concealing the client's ownership of the stocks, the documents said.
Messrs. Bandfield and Godfrey also explained that they would offer clients prepaid credit cards on which they could load up to $50,000 a month to launder the fraudulent proceeds, according to the documents. "We can make it so it's not attached to you," the men said in one recorded conversation, according to the court documents.
The agents subsequently obtained court-approved wiretaps, which led them to the U.S. clients, according to court documents.
In one instance uncovered by the wiretaps, prosecutors alleged the defendants manipulated the stock of Cannabis-Rx Inc., CANA +5.26% a penny-stock company that catered to the real-estate needs of the regulated cannabis industry in the U.S.
Market Data 
Markets 
AI
