SEC Charges Eight for a Widespread Pump-and-Dump Scheme

By: Brittany DeDiego, Fall 2014 Student Intern

pump2On September 18, 2014, the SEC charged eight individuals in an alleged pump-and-dump scheme involving a California penny stock company.

Izak Zirk de Maison (formerly Izak Zirk Engelbrecht) allegedly orchestrated this scheme and was charged along with his wife and his associates who helped buy, sell and promote the stock in de Maison’s company. The company, most recently called Gepco Ltd., was used as an alleged front while the associates amassed a large amount of Gepco common stock. De Maison then allegedly manipulated the market to allow his associates to sell the stock at inflated prices to make hundreds of thousands in illegal profits. Gepco was originally incorporated in 2008, under a different name. Since its incorporation, de Maison allegedly caused the company to go into several reverse mergers and went from a company leasing equipment, to a company selling prepaid value cards related to electronic devices, to a social media website known as WikiFamilies. In 2013 the company was merged into a purported high-end diamond business. De Maison allegedly used company name changes and reverse mergers to gain more control over common stock in order to inflate Gepco’s stock prices. According to the SEC’s complaint, de Maison also allegedly recorded his scheme in a series of emails and text messages with his co-conspirators, which documented their coordinated efforts for their promotional activities and the manipulation of the stock prices to create a false impression of market activity.

This alleged pump-and-dump scheme should serve as a reminder to investors: always research a company thoroughly before investing. For more information on the SEC’s charges, read the full release here.