By Patricia Uceda, Fall 2014 Graduate Research Assistant
The SEC recently uncovered an alleged international penny stock fraud scheme being conducted by two Canadians through the use of a coal mining company located in Tennessee. The alleged scheme was a classic pump-and-dump scam that involved hyping up the stock price of a company and then cashing out.
Bruce D. Strebinger and Howard Chapman are charged with acquiring substantial ownership positions of more than 5% of the stock in Americas Energy Company, a shell mining company. They allegedly did not disclose their ownership stakes as required under federal securities law. Soon after acquiring their shares, they allegedly commenced an aggressive campaign promoting Americas Energy stock to investors that involved blast e-mails and mailing out misleading stock promoting reports.
Strebinger and Chapman allegedly attempted to disguise the sale of their stock by discreetly dumping small portions at a time and then routing the proceeds in small amounts to offshore accounts. The SEC alleges that the intricate web of sales involved foreign accounts located in Canada, Panama, Switzerland, and the Turks and Caicos Islands. Through this elaborate scheme, the SEC claims they were able to generate more than $17 million.
Both have been charged with multiple violations of federal securities acts, as well as aiding and abetting each other’s violations. The SEC is seeking a permanent injunction and the return of all ill-gotten gains.