UPDATE 1-U.S. charges nine with $131 mln ForceField Energy fraud

Tue May 3, 2016 2:29pm EDT
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(Adds details of charges, defendants' names, SEC charges, byline)

By Jonathan Stempel

NEW YORK May 3 (Reuters) - U.S. prosecutors on Tuesday charged nine people with defrauding investors into buying the now essentially worthless stock of LED lighting provider ForceField Energy Inc, causing $131 million of losses.

The charges against the defendants, who include stock promoters, brokers and investor relations officials, were announced by U.S. Attorney Robert Capers in Brooklyn.

They follow the April 2015 arrest of Richard St. Julien, a Canadian citizen who was ForceField's executive chairman, on charges he orchestrated schemes to inflate the stock price of his company, which was once called SunSi Energies Inc.

The U.S. Securities and Exchange Commission on Tuesday announced related civil charges against all 10 defendants, including St. Julien.

Authorities said the defendants manipulated ForceField's stock from December 2009 to April 2015 by secretly trading it in undisclosed accounts, inflating trading volume to create a false sense of demand, and concealing kickbacks to stock promoters and brokers to tout it.

One defendant, Herschel Knippa, 45, was accused of promoting the stock on Fox Business Network's "Varney & Co" in July 2014 without revealing he was receiving kickbacks, and lying to host Stuart Varney when asked if he owned ForceField by responding: "You bet I do. I put my money where my mouth is."

The defendants "took a company with essentially no business operations and little revenue and deceived the market and their clients into believing it was worth hundreds of millions of dollars through a dizzying round of unauthorized trades and deceptive promotions," Capers said in a statement. "The deceived investors were left holding the empty bag."   Continued...