Replies to post #387 on CO2 Tech Ltd (fka CTTD)

[northwoods]

Stock Promoters Indicted for Conspiracy in Stock Manipulation Scheme
May 06, 2011
OTC Disclosure & News Service

Washington, DC -

Stock Promoters Indicted for Conspiracy in Stock Manipulation Scheme
U.S. Department of Justice May 02, 2011 ¦Office of Public Affairs [phone]/ [phone]


— filed under: Press Release
WASHINGTON—Three stock promoters have been indicted for their roles in a stock manipulation scheme that defrauded investors, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Chief Postal Inspector Guy Cottrell of the U.S. Postal Inspection Service (USPIS) and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office.

Timothy Barham Jr., 43, of Henderson, Tenn.; Nathan Montgomery, 30, of Henderson, Nev.; and Ryan Reynolds, 39, of Dallas, were each charged in a superseding indictment filed on April 28, 2011, in U.S. District Court for the Southern District of Florida. On April 29, 2011, Barham was arrested in Henderson, Tenn., and Montgomery was arrested in Las Vegas. Reynolds, who was in custody on previously filed civil charges, made his initial appearance today in U.S. District Court in Dallas.

The superseding indictment charges Barham, Montgomery, and Reynolds each with one count of conspiracy to commit securities fraud, wire fraud, and mail fraud. The superseding indictment also charges six individuals who were originally indicted in February 2010 for their roles in the fraud scheme: Jonathan Randall Curshen, 46, of Sarasota, Fla.; Michael Simon Krome, 49, Long Island, N.Y.; Ronald Salazar Morales, aka “Ronny Salazar,” 39, of Costa Rica; Robert Lloyd Weidenbaum, 44, of Miami; and Eric Ariav Weinbaum, 37, and Izhack Zigdon, 47, both of Israel.

According to the superseding indictment, Curshen was the principal behind Red Sea Management and Sentry Global Securities, two companies located in San Jose, Costa Rica, that provided offshore accounts and facilitated trading in penny stocks. The superseding indictment alleges that Weinbaum and Zigdon took control of the outstanding shares of a company called CO2 Tech (ticker CTTD), which traded in the over-the-counter market through listings on Pink Sheets, an inter-dealer electronic quotation and trading system. Weinbaum and Zigdon allegedly obtained the shares by retaining Krome, a securities attorney. Krome allegedly evaded federal securities registration requirements in order to provide co-conspirators with millions of unregistered and “free-trading” shares of CO2 Tech that the co-conspirators could not have otherwise legally obtained.

The superseding indictment alleges that the shares were subsequently sold to the general investing public by Weinbaum, Zigdon, Curshen, and Salazar, a Sentry Global stock trader, through Sentry Global’s stock trading floor. According to court documents, the defendants concealed from the investing public the actual financial condition and business operations of CO2 Tech by evading the registration requirements. The superseding indictment also alleges that Weidenbaum, Reynolds, Montgomery, and Barham coordinated trades by purchasing shares of CO2 Tech on the open market from Curshen, Weinbaum, and Salazar. Weidenbaum was allegedly paid approximately $1 million by Weinbaum and Zigdon to participate in sham stock trades of CO2 Tech to make it appear that there were genuine investors in the market that were buying the shares.

As alleged in the superseding indictment, coordinated trades were often made between the co-conspirators in conjunction with the issuance of false and misleading press releases that were designed to make CO2 Tech appear that it had significant business prospects. According to these press releases, CO2 Tech purported to have a business relationship with Boeing to reduce polluting gases emitted from airplanes. The superseding indictment alleges that these relationships never existed.

After fraudulently “pumping” the market price and demand for CO2 Tech stock through these press releases and coordinated trades, Weinbaum, Curshen, Salazar, Reynolds, Montgomery and Barham allegedly “dumped” shares by selling them for large profits to the general investing public in the over-the-counter market through listings on Pink Sheets. These shares were allegedly purchased by unsuspecting investors, including in the Southern District of Florida, and were often rendered virtually worthless.

The superseding indictment further alleges that Curshen and Salazar engaged in a conspiracy to commit money laundering. Curshen, through Red Sea and Sentry Global, allegedly established domestic and offshore bank accounts through which the proceeds of stock manipulation schemes flowed. The superseding indictment alleges that Curshen and Salazar used these accounts to conceal the origin and ownership of the ill-gotten gains from these schemes.

The defendants are all charged with one count of conspiracy to commit securities, mail, and wire fraud. Additionally, as in the original indictment, the superseding indictment charges Krome with one count of securities registration violation, one count of obstruction of justice and one count of wire fraud. Weinbaum and Zigdon also continue to be charged with three counts of wire fraud. In addition, Curshen and Salazar each are charged with two counts of mail fraud, and Weidenbaum and Weinbaum each are charged with one count of mail fraud. The superseding indictment also charges Curshen and Salazar with one count of conspiracy to commit money laundering. The superseding indictment seeks forfeiture in the amount of $7 million.

The fraud conspiracy charge carries a maximum penalty of five years in prison and a $250,000 fine. Each count of wire fraud and mail fraud carries a maximum penalty of 20 years in prison and a $250,000 fine. The securities registration violation carries a maximum penalty of five years in prison and a $10,000 fine and the obstruction count carries a maximum penalty of 20 years in prison and a $250,000 fine. The money laundering conspiracy charge carries a maximum penalty of 20 years in prison.

Curshen, Krome, Salazar, Weinbaum, Zigdon, and Weidenbaum were also charged by the Securities and Exchange Commission in February 2010 in a related civil matter.

An indictment is merely a charge and defendants are presumed innocent until proven guilty.

The case was investigated by the FBI’s Washington Field Office and the USPIS. The case is being prosecuted by Trial Attorneys N. Nathan Dimock and Rina Tucker Harris of the Criminal Division’s Fraud Section. The U.S. Attorney’s Office for the Southern District of Florida provided significant assistance in this case. The Department of Justice acknowledges the significant assistance of the Financial Industry Regulatory Authority (FINRA) and the SEC in its investigation. The Criminal Division’s Office of International Affairs and Costa Rican authorities also provided assistance.

Today’s charges are part of efforts underway by the Financial Fraud Enforcement Task Force. President Obama established the interagency task force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.


The above news release has been provided by the above company via the OTC Disclosure and News Service. Issuers of news releases and not OTC Markets Group Inc. are solely responsible for the accuracy of such news releases.

http://www.otcmarkets.com/stock/CTTD/news?id=30159

[Buckey]

CO2 Tech's Krome pleads guilty


CO2 Tech Ltd (U:CTTD)
Monday January 16 2012 - Street Wire

Also U.S. Securities and Exchange Commission (U:*SEC) Street Wire

by Mike Caswell

Michael Krome, the New York lawyer charged for writing fraudulent opinion letters in the CO2 Tech Ltd. market manipulation, has pleaded guilty to one count of conspiracy to commit securities fraud. He entered the plea in a 35-minute appearance before a judge in Miami on Friday, Jan. 13.

Prosecutors allege that Mr. Krome and others, including recidivist securities violator Jonathan Curshen, were part of a 2007 scheme to boost CO2 Tech with false claims about a pollution control product in which Boeing had purportedly taken an interest. The men pumped the stock to $1.65 and obtained $7-million in illegal profits, according to the government. (All figures are in U.S. dollars.) Also named in the scheme was former Pacific International Securities Inc. broker David Ricci, who is a defendant in a parallel civil suit from the U.S. Securities and Exchange Commission.

According to prosecutors, Mr. Krome, 49, wrote fraudulent opinion letters that allowed his co-defendants to obtain 22.5 million tradable shares in CO2 Tech, many of which they sold during the promotion. He also tried to conceal their identities in subsequent interviews with the SEC. Mr. Krome had initially pleaded not guilty to the charges. He is now scheduled for sentencing on Wednesday, May 9, and remains free on a $100,000 appearance bond. The maximum sentence is five years in jail.

CO2 Tech charges
The charges against Mr. Krome and the others are described in a complaint the SEC filed in the Southern District of Florida on Feb. 18, 2011. According to the complaint, the CO2 Tech scheme arose after Mr. Curshen was hired to promote the company by two Israeli men, Ariav Weinbaum and Yitzchak Zigdon (who are also defendants). He agreed to sell massive quantities of shares using nominee accounts, which he controlled through a Costa Rican entity called Red Sea Management Ltd.

Mr. Krome's role came in the initial stages of the scheme. According to the SEC, he had CO2 Tech issue 22.5 million shares purportedly to settle a $200,000 debenture. The debenture, however, was a pretext to issue shares to the company's undisclosed promoters and was obviously fraudulent, the SEC said. Among other things, it was signed by a person who did not become chairman of the company until four months after the date of the debenture.

The actual promotion, as described by the SEC, began on Jan. 29, 2007, just two weeks after Mr. Krome wrote the opinion letters that made the stock tradable. The SEC said the company issued a misleading news release in which it claimed to have been working on a pollution control product for over a decade. The company further claimed that it had a manufacturing operation in Israel and London, but according to the SEC the London office was actually a mail drop and the manufacturing operation could not be found.

The next day, CO2 Tech issued a news release which stated that Boeing had taken an interest in one of the company's products. In reality, there was no such interest, as the company had no communication with Boeing prior to the news release, the SEC said. The only communication came in the form of a cease-and-desist letter that CO2 Tech received from Boeing after issuing the news.

As the news and related spam were going out, Mr. Curshen and Mr. Ricci carried out a series of wash trades that helped "jump-start" the stock, the complaint stated. On the day of the Boeing release, they began executing trades at gradually increasing prices. As buyers entered the market, they started dumping shares, the SEC claimed. The stock went from 91 cents to $1.65 that day on volume of 12.2 million shares. (It was last at 0.2 cent.) Their trading that day generated $5.5-million in profits.

The SEC sought disgorgement of ill-gotten gains, appropriate civil penalties and penny stock bans. In filing the case, the SEC acknowledged the assistance of the B.C. Securities Commission, the Costa Rican Police, the Israel Securities Authority, the United Kingdom Financial Services Authority and the City of London Police.

While Mr. Krome has now pleaded guilty to the criminal charges (and separately settled the SEC case), his co-accused look to be headed for trial. With Mr. Curshen, prosecutors will argue that he fraudulently promoted several stocks through Red Sea, including CO2 Tech, and funnelled $91.5-million through an account at HSBC in Vancouver, most of which represented proceeds from pump-and-dumps. Although he pleaded not guilty, he is already in jail serving a 16-month sentence from an unrelated case. (He tried to bribe corrupt brokers to buy shares of a Washington State company, Industrial Biotechnology Corp. It turned out the man purporting to represent the brokers was an undercover FBI agent.)

The two Israeli defendants, Mr. Weinbaum and Mr. Zigdon, have not yet made an appearance in the criminal case. Mr. Weinbaum has not been arrested, and Mr. Zigdon is in custody in Germany awaiting extradition. Both men have responded to the SEC case, and generally deny any wrongdoing.

Mr. Ricci, now a resident of Costa Rica, was not a defendant in the criminal case (although he is expected to be a witness). He settled with the SEC the day it filed its civil suit, agreeing to a penny stock ban and to an injunction barring future violations. He did not admit to any wrongdoing. Before going to Costa Rica, he worked at PI for five years, leaving the firm on Nov. 17, 1999.