Crown Capital Management

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Nine Individuals Indicted in One of the Largest International Penny Stock Frauds and Advance Fee Schemes in History

BROOKLYN, NY—Earlier today, the Federal Bureau of Investigation (FBI) arrested six men in New York, Arizona, New Jersey, Florida, and California for engaging in an international fraud conspiracy that spanned the globe from North America to Europe and Asia. A seventh defendant was also arrested today on a provisional arrest warrant in Ontario, Canada. The arrests resulted from an indictment charging nine defendants with 24 counts of securities fraud, wire fraud, and false personation of Internal Revenue Service (IRS) employees in connection with the sale of securities and conspiracy (the investigation showed that the identities used were fictitious and that no IRS employees were involved in the scheme). As set forth in court filings, the defendants masterminded securities fraud and advance fee schemes that victimized investors in approximately 35 nations and generated more than $140 million through various brokerage and bank accounts under their control. To uncover the international aspects of the scheme and gather evidence, the FBI used wiretaps in the United States and undercover agents in foreign countries.

The indictment and arrests are the result of one of the largest international penny stock investigations ever conducted by the Department of Justice and the FBI and mark the unveiling of a multi-year, ongoing investigation, which included significant assistance from the Royal Canadian Mounted Police (RCMP), as well as from other U.S. law enforcement agencies and law enforcement authorities in England, as well as assistance from Thailand and China.

The defendants are charged in two separate but interrelated schemes. According to the indictment, the defendants first engaged in an international "pump and dump" scheme during which they fraudulently "pumped up" the share price of worthless penny stocks and then "dumped" billions of shares of those stocks by unloading them on unsuspecting victim investors across the globe. Second, the defendants operate