Canadian pleads guilty in massive U.S. penny stock fraud case

Fri Jul 17, 2015 5:51pm EDT
 
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NEW YORK, July 17 (Reuters) - A Canadian man pleaded guilty on Friday to running an international boiler room scheme in a case that stemmed from one of the largest penny stock investigations in U.S. history, according to federal prosecutors.

Sandy Winick, 57, pleaded guilty to conspiring to commit wire fraud for running a $5 million scheme in which investors in U.S. penny stocks were duped into paying fees for nonexistent services, prosecutors in Brooklyn, New York, said on Friday.

Winick had also been charged with masterminding a $140 million "pump-and-dump" fraud in which he allegedly inflated the price of worthless penny stocks and then dumped billions of shares on investors in nearly three dozen countries.

His guilty plea in Brooklyn federal court was directly related only to the fee fraud, which stemmed from the pump-and-dump scheme and involved many of the same investors, prosecutors said. The plea resolves the criminal prosecution against him.

All told, nine defendants were charged with participating in one or both schemes; seven have pleaded guilty thus far.

The fee scheme involved boiler rooms in four countries, where the defendants called penny stock investors and convinced them to pay advance fees that the defendants promised would allow them to sell their shares and recover any losses, prosecutors said.

Instead, the fees were simply pocketed, prosecutors said.

Local authorities in Thailand arrested Winick there in 2013 and he was extradited to the United States. He faces up to 20 years in prison when he is sentenced.

His defense lawyer did not respond to a request for comment on Friday afternoon. (Reporting by Joseph Ax; Editing by David Gregorio)