In a second superseding indictment to an ongoing Texas securities fraud probe, the US Attorney’s Office for the Southern District of Texas has brought criminal charges again against several people accused in an alleged multimillion dollar pump-and-dump scam. This latest indictment expands on the original criminal charges, which involved Chimera Energy Corp. stock and an alleged $6M scam.
With this latest indictment, investors of 12 stocks were allegedly defrauded of more than $25M. Prosecutors said that the scam bilked investors in different companies through the use of fraudulent trading practices, the publication of misleading and false information via ads and press releases, and the circumvention of Securities and Exchange Commission reporting requirements.
Those charged in this latest Texas securities indictment include Andrew Ian Farmer, Charles Earl Grob, Carolyn Price Austin and Eddie Douglas Austin of Houston, John David Brotherton of League City, and Scott Russel Sieck of Florida for the parts they played in the alleged conspiracy fraud involving a dozen stocks, including Chimera Energy Corp. stock. The latter was the stock involved in the initial criminal indictment that brought charges against both Farmer and Thomas Galen Massey, also a Houston resident.
In April, a federal grand jury brought the initial superseding indictment charging the Austins, Grob, Sieck, and Brotherton. Also that month, Massey, an ex-Chimera executive, pleaded guilty to conspiracy to commit wire fraud. As part of his plea deal, he consented to pay up to $1M in restitution and provide testimony regarding the scam.
Pump-and-Dump Schemes
A pump-and-dump fraud usually involves efforts to fraudulently inflate a stock price, as shares are sold to investors. Eventually, the promoters of the scam will stop promoting the stock after selling enough of their shares at the artificially raised rate. This then causes the price of the stock to drop, which means investors are left with stock that is worth a lot less than the inflated price at which they bought the shares. Meantime, the fraudsters will have profited from the stock sales that they manipulated.
Texas State Securities Board Suspends San Antonio Investment Adviser
In other Texas securities fraud news, a Disciplinary Order entered by Texas Commissioner John Morgan announced that San Antonio investment adviser Michael Keith Parish must pay a $5K fine and serve a 30-day suspension for violating state rules regarding the custody of client funds. Parish is accused of violating the rule that bars investment advisers from keeping custody of client securities or money unless certain security measures have been put in place. The State Securities Board also said that he did not keep certain records and ledgers related to the liabilities, assets, income, and reserve capital of his business.
Texas Securities Lawyers
Shepherd Smith Edwards and Kantas LTD LLP is the largest Texas securities fraud law firm in the state and one of the biggest in the US that focuses only on representing investors. We are based in Houston but are proud to work with investors throughout Texas. We have successfully gone up against the biggest Wall Street firms on behalf of our clients.
Our Houston securities attorneys represent individual investors, ranging from retail investors to high net worth clients, and institutional investors who have sustained losses because of inappropriate and improper recommendations made by financial advisers and their firms or due to other fraudulent actions.
The Texas Regulator’s Disciplinary Order Against Parish (PDF)
Six Defendants Charged in Expanded Securities Fraud Conspiracy, Justice.gov, July 20, 2017