A Canadian man accused of masterminding an international penny stock fraud scheme that swindled investors worldwide of more than $140 million has been arrested in Thailand.
The U.S. Federal Bureau of Investigations says Sandy Winick, 55, was arrested over the weekend, just days after authorities rounded up seven of his alleged accomplices.
Canadians Gregory Ellis, 46, and Kolt Curry, 38, were taken into custody Aug. 13, along with five Americans accused of helping to carry out what authorities have called one of the largest penny stock frauds in history.
Curry's father, 63-year-old Gregory Curry, is still at large and the FBI said he's believed to be living in or near Bangkok, Thailand.
Alleged 'pump and dump' scheme
It's alleged the defendants were involved in a massive "pump and dump" scheme — buying controlling interests in sketchy startup companies, then artificially inflating their value by promoting them in fictitious emails, social media messages and news releases.
Court papers say the defendants then victimized the same investors by convincing them to pay advance fees in return for helping them sell their securities or join lawsuits to reclaim their losses.
The sales campaign generated more than $120 million in investments, while the fees scheme brought in some $20 million, authorities said.
Investigators believe Winick orchestrated the cons — the latest in a string of troubled business dealings that have landed him in hot water with regulators in Canada and the U.S. over the years.
The FBI alleges victims of the schemes live in nearly 35 countries including Canada, the United States, Australia, and elsewhere in Asia, Europe, and South America.
The Ontario Securities Commission issued a cease trade order in 2011 against Winick and several others for their handling of companies including Liquid Gold International Corp. and BFM Industries Inc.Stock fraud scams tough to combat in internet age
In a ruling issued in early August, the commission said both companies received hundreds of thousands of dollars in foreign investments despite never having an operating business.
Much of the money went to unrelated expenses, including payments to credit cards in Winick's name, the commission said, adding it found the BFM and Liquid Gold Schemes to be "entirely fraudulent."
Neither Winick nor his co-accused, among them Gregory Curry, took part in the OSC hearings. Sanctions against them are to be laid out in September, and the commission has the authority to proceed in their absence.
Ordered to repay $3.2M
Meanwhile, American authorities have ordered Winick to pay back roughly $3.2 million in "ill-gotten gains" obtained through what they call an "illicit trading scheme" involving another penny stock issuer.
The Securities and Exchange Commission alleges Winick created 59 subsidiaries of Blackout Media Corp., of which he was a principal, then sold unregistered shares of the spinoff companies and pocketed the sales.
It further alleges the subsidiaries had no legitimate business purpose or assets, and that Blackout — then known as First Canadian Holding Company — didn't file any of the legally required financial reporting information for them.
When Winick didn't respond to the SEC's complaint, the commission took the matter to court, which ruled in its favour last September.
Other penalties imposed on Winick by the court include the cancellation of his stock in Blackout and its subsidiaries, and a permanent bar on penny stocks.
Cancelling his stock "is appropriate here given the prolonged and widespread nature of Winick's illegal behaviour, and given that none of the 59 subsidiaries had any legitimate business activity," the decision reads.
Winick also filed for personal bankruptcy in 1983, when he lived in the wealthy north Toronto neighbourhood of Willowdale, records show. At the time, he listed $2,500 in assets and $170,000 in liabilities.
Fifteen years later, he obtained a commercial proposal, a legally binding compromise between a commercial debtor and his creditors, documents from the Office of the Superintendent of Bankruptcy.
In that file, which was completed in 1998, he listed no assets and $371,000 in liabilities.