Two Canadian men at the centre of an alleged international penny stock fraud have been ordered by a provincial tribunal to pay more than $1 million in penalties for breaking Ontario securities law.
The Ontario Securities Commission also said Sandy Winick and Gregory Curry are permanently banned from securities trading, being an investment dealer, fund manager, director or corporate officer of any company.
The sanctions are related to three separate schemes involving securities of BFM Industries Inc., Liquid Gold International Corp. and Nanotech Industries Inc.
OSC commissioner James Carnwath ruled in a 14-page decision released Tuesday that Winick committed "a series of acts including the illegal distribution and unregistered trading of securities.
"Winick engaged in an ongoing course of deceitful and fraudulent conduct designed to personally enrich himself at the expense of innocent investors," Carnwath wrote.
Criminal charges in U.S.
Winick is also facing criminal charges in the United States, accused by the U.S. Attorney's office of being the leading figure in fraud schemes involving US$140 million and spanning dozens of countries including Canada and tens of thousands of victims.
Curry is also facing U.S. criminal charges based on allegations filed in August by the U.S. Attorney's office for the eastern district of New York.
The U.S. charges are still before the courts.
The OSC's ruling, which doesn't make any mention of the U.S. allegations, deals with three schemes that were allegedly carried out between May 2009 to December 2010.
"During that time, the respondents' violations of Ontario securities law were widespread and were contrary to public interest," according to the OSC decision.
"The three schemes of the respondents required multiple bank accounts and involved several companies."
28 foreign investors conned
The OSC alleges that the BFM scheme involved 28 foreign investors, while the Liquid Gold scheme involved at least four investors.
The third scheme, involved a letter that was sent to 10,000 international addresses, allegedly contained misleading statements regarding Nanotech's share price and warrant offers.
Nanotech had been dissolved in March 2009, but was represented as a ongoing company in the letter, said the OSC.
In relation to the schemes, the regulator alleges that a total of $2.6 million was taken from the bank accounts of BFM and Liquid Gold, and used for Winick's "personal benefit" including to pay off his credit cards, personal taxes and hydro bills.
Curry is alleged to have received $78,000 US from Winick and a company which Winick's wife acted as director and officer.
Winick is ordered to pay an administrative penalty of $750,000 to the OSC, and give up $281,200 of illegal profits. Curry is ordered to pay a $150,000 administrative penalty and must return $78,000 in illegal profits.
The OSC also ordered Winick and Curry to pay $50,000 for costs incurred by the commission.
In August, the two men were arrested in Thailand, accused of being involved in a massive penny stock fraud scheme that bilked investors in the United States and other countries of more than US$140 million.
Arrested in Thailand
The scheme was allegedly masterminded by Winick and Curry, and two other Canadians — Gregory Ellis, 46, and Kolt Curry, 38 — and carried out with the help of five Americans. The cases are before the U.S. courts.
The arrests last summer were the result of a multi-year investigation involving the FBI and the RCMP, relying on wiretaps in the U.S. and undercover agents abroad.
The indictment alleges that 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.
In some cases, it's alleged some members of the ring pretended to work for the U.S. Internal Revenue Service.