The FBI is searching for an Oakville man wanted in connection with a “pump-and-dump” stock scheme that also involved several others.
The Department of Justice (DOJ) of the Southern District of California issued the indictment yesterday with charges of securities fraud for running the scheme surrounding two publicly-traded stocks. The investigation that led to these charges involved a co-conspirator-turned-confidential-informant who was cooperating with the FBI.
None of the charges have been proven in court.
According to court documents, four men were working together in a stock fraud ring that artificially inflated the prices of penny stocks, then quickly unloaded their own shares before the prices collapsed.
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As alleged in the indictment, a pump-and-dump scheme takes place when subjects acquire publicly-traded stock at low prices, issue misleading news releases or promotional materials to artificially increase the price of the stock, sell the stock to unsuspecting investors, and split the proceeds.
Two companies were involved including Ottawa-based VMS Rehab Systems, which claimed to sell “quality of life orthopaedic seat cushions for the home healthcare sector,” according to the U.S. government.
“These defendants sought to boost the stock price of two companies, and then leave innocent investors with investments that they knew would almost immediately lose most or all of their value,” said U.S. Attorney Robert Brewer.
Wanted by the FBI is Ashmit Patel, 36, of Oakville. Charges include conspiracy to commit securities fraud, securities fraud and manipulative securities trading.
The DOH says the charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.