Securities Broker Sentenced to 84 Months

   (DOJ) - 5/22/2013 - A former stock broker was sentenced to prison on May 16 for his role in an extensive pump-and-dump stock manipulation scheme.
   The announcement was made by Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division , U.S. Attorney Danny C. Williams Sr. of the Northern District of Oklahoma, Special Agent in Charge James E. Finch of the FBI’s Oklahoma City Division and Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber.
  Joshua Wayne Lankford, 39, of Dallas, was sentenced by U.S. District Judge James H. Payne in the Northern District of Oklahoma to serve 84 months in prison. In addition to his prison term, Lankford was ordered to forfeit $250,000. Proceeds from forfeited assets will be used to bring partial restitution to victims.
  On Dec. 10, 2012, Lankford pleaded guilty to one count of money laundering.
   “Mr. Lankford and his co-conspirators took advantage of innocent investors to the tune of millions of dollars, pumping and dumping penny stocks without regard to anything but their wallets,” Raman said. “As this case shows, stockbrokers and other professionals will be punished if they break the law. Lankford now faces substantial time in prison for his manipulation scheme.”
   According to court documents and evidence presented at the 2010 trial, Lankford and his co-defendants manipulated the stocks of three companies: Deep Rock Oil & Gas Inc. and Global Beverage Solutions Inc., formerly known as Pacific Peak Investments, both of Tulsa, Okla., and National Storm Management Group Inc. of Glen Ellyn, Ill. The defendants devised and engaged in a scheme to defraud investors known as a “pump and dump,” in which they manipulated publicly traded penny stocks. A penny stock is a common stock that trades for less than $5 per share in the over the counter market, rather than on national exchanges. Lankford and his co-defendants executed the scheme by obtaining a majority of the free-trading shares of stock of the company they intended to manipulate, using fraudulent and deceptive means to acquire the stock and/or remove the trading restrictions on the shares they obtained.
   According to court records, Lankford and other conspirators “parked” their shares with various nominees, such as friends, relatives or other entities that they owned and controlled. Subsequently, they engaged in coordinated trading in order to create the appearance of an emerging market for these stocks, after which they conducted massive promotional campaigns in which unsolicited fax and email “blasts” were sent to millions of recipients. According to evidence presented at the 2010 trial, these blasts touted the respective stocks without accurately disclosing who was paying for the promotions, omitted that the defendants intended to sell their shares, and induced unsuspecting legitimate investors to purchase stock in the companies. The defendants and their nominees obtained significant profits by selling large amounts of shares after they had artificially inflated the stock price. For each of the three manipulated stocks, the conspirators’ sell-off caused declines of the stock price and left legitimate investors holding stock of significantly reduced value.
   According to Lankford’s guilty plea, he laundered $250,000 in proceeds derived from the stock manipulation scheme.
   Evidence presented in the 2010 trial showed that the overall scheme resulted in illegal proceeds of more than $43 million from more than 17,000 investor victims.
   Lankford was originally charged in a 24-count indictment unsealed on Feb. 10, 2009, against five defendants. Prior to trial, Lankford fled to Costa Rica, where he remained until he was extradited to the United States in May 2012. James Reskin, 54, of Louisville, Ky., was sentenced today to serve five years of probation for his role in the scheme. Co-defendants George David Gordon and Richard Clark, were convicted by a federal jury in May 2010 for their roles in the scheme. Gordon was sentenced to serve 188 months in prison, and Clark was sentenced to serve 151 months in prison. The fifth defendant, Dean Sheptycki, remains a fugitive.
   The case is being prosecuted by trial attorneys Andrew Warren and Kevin Muhlendorf of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Catherine Depew for the Northern District of Oklahoma. The case is being investigated by IRS-CI and the FBI.

Photo by Steve Rensberry (c) 2014