A U.S. federal court judge in Boston has finalized penalties and repayment orders for five of eight B.C. residents found liable in civil proceedings for their role in an expansive US$1 billion-plus offshore stock fraud scheme orchestrated from 91原创.
The U.S. Securities and Exchange Commission (SEC) June 26 the five British Columbians were collectively ordered on June 20 by the U.S. District Court for the District of Massachusetts to pay more than US$48 million in civil penalties and disgorgement of ill-gotten profits, bringing total monetary orders in the case to US$110.8 million
The SEC stated the five were found liable "for their roles in fraudulent schemes that collectively generated hundreds of millions of dollars from unlawful stock sales and caused significant harm to retail investors in the United States and around the world."
The disgorgement orders were issued against: Paul Sexton, of Anmore (US$17.4 million); Jackson Friesen, of Delta (US$11.8 million); Mike Veldhuis, of 91原创 (US$11.8 million); Zhiying Yvonne Gasarch, of Richmond (US$2.5 million); and Courtney Kelln, of Surrey (US$1.6 million).
Sexton, Veldhuis and Friesen were each issued US$1.56 million in civil penalties whereas Gasarch must pay a US$269,651 penalty and Kelln is ordered to pay an additional US$904,078.
The fines are in addition to three previously secured monetary judgments totalling US$68.3 million against two other B.C. residents and one former B.C. resident now residing in California: is to pay the commission US$5 million after reaching a settlement in January 2023, in which he neither admitted or denied the allegations against him; Avtar Dhillon, a former B.C. resident who now resides in Long Beach, Calif. .
Dhillon now faces wherein he's been found guilty. Dhillon’s sentencing was postponed from May 23 to Dec. 4.
The largest final monetary order, for US$52.9 million, is against West 91原创 resident Fred Sharp — the man the commission claimed was the “mastermind” of the “sophisticated, multiyear, multi-national attack on the United States financial markets and retail United States investors."
The commission filed , that collectively outlined a scheme involving over US$1 billion worth of stock trades in over 100 public companies between 2012 and 2020.
Sharp, a former lawyer, was found liable for setting up layers of offshore accounts to disguise beneficial ownership of shares for numerous groups that had control of large amounts of public company shares. One so-called “control group” consisted of Veldhuis, Sexton and Friesen. Meanwhile, it was Gasarch and Kelln who allegedly worked with Sharp to complete the trades.
Sharp dubbed himself “Bond” in an encrypted communication system called “Q” that used “X phones,” according to the SEC.
In one example of trading, the commission had alleged Sharp moved accounts under the name of his wife's tennis coach on the North Shore.
Sharp, Kelln, Sexton and Veldhuis are also but have yet to face trial and are presumed innocent of those charges.
Dhillon had initially denied criminal allegations against him but flipped his plea and subsequently testified to his role in the case against the seven others, last year.
All of the individuals have been banned from the U.S. penny stock market in any capacity, save for trading on a national securities exchange in personal accounts.
The saga is expected to produce many more court decisions, including here in B.C. as individuals contest the SEC’s efforts to seize their property under civil forfeiture laws.
