SANTA ANA – LawFuel – Legal Newswire – An Orange County man has been charged with participating in a “pump-and-dump” scheme orchestrated by his uncle in which they pumped up the value of two shell companies and then dumped their stock as the price rose.
Jeffrey Alan Harry, 34, of San Clemente, California, was named in a superseding indictment that also names his uncle, Gregory Turville Harry and James Daniel Sifford. G. Harry and Sifford were initially indicted in this case in April 2007.
G. Harry operated Paladin Global Group, Ltd., which purported to provide business services to public companies, including Austin Chalk Oil and Gas, LLC and Am-Tex Oil & Gas, Inc. Sifford and J. Harry worked with Paladin.
The indictment alleges that beginning in the spring of 2004, J. Harry and
G. Harry gained a majority shareholder interest in Austin Chalk and Am-Tex by issuing millions of shares of stock to themselves and their nominees for purported services provided to Austin Chalk and Am-Tex. The defendants subsequently made false and misleading statements about Austin Chalk and Am-Tex on the companies’ websites, spam e-mail campaigns, and in financial newsletters they created and distributed to thousands of investors nationwide. The Am-Tex newsletter promised investors up to a 500 percent return on their investments, while the Austin Chalk newsletter claimed its oil wells were producing 350 barrels of oil a day. According to the indictment, the defendants knew that Austin Chalk and Am-Tex were little more than shell companies with few assets and almost no business operations. Investors purchased shares of Austin Chalk and Am-Tex based on the false representations. The defendants sold their shares of Austin Chalk and Am-Tex into an artificially high market and recognized over $6 million in trading profits. The defendants are accused of subsequently laundering the proceeds through several foreign bank accounts and back into domestic bank accounts.
The superseding indictment charges defendants with securities fraud, mail fraud, wire fraud, and money laundering. These charges carry a statutory maximum penalty of 540 years in prison and $6 million in fines.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
J. Harry will be summoned to appear for an arraignment in United States District Court on May 19, 2008. The other two defendants, who are scheduled for trial in March 2009, will also be arraigned on the superseding indictment.
The Securities and Exchange Commission (SEC), the Federal Bureau of Investigation, and IRS-Criminal Investigation collaborated in the investigation of this case.
CONTACT: Special Assistant United States Attorney Margaret Cain
Assistant United States Attorney Jennifer Waier