SAN FRANCISCO – LAWFUEL – The Law News Network – United States Attorney Kevin V. Ryan and Special Agent in Charge of the FBI Joe Ford announced Zahra Gilak was convicted of one count of securities fraud and four counts of money laundering by a federal jury late yesterday.
The jury, after deliberating three days, found that the defendant had participated in a stock manipulation scheme in connection with the purchase and sale of shares of M&A West, Virtualender.com, and Digital Bridge on the Over-the-Counter Bulletin Board in 1999-2000. The guilty verdict followed a three-week jury trial before U.S. District Court Chief Judge Vaughn R. Walker. This conviction is the result of an investigation by the Federal Bureau of Investigation.
Evidence at trial showed that Ms. Gilak, 51, of Penngrove, California, devised a scheme to gain a controlling interest over three publicly traded companies. She concealed her interest in those companies by holding stock through multiple shell companies that she controlled. After manipulating demand for the stock, Ms. Gilak sold the securities, reaping approximately $14 million in net proceeds. Ms. Gilak’s conviction follows the guilty pleas of co-defendant F. Thomas Eck, III. and Scott Kelly, former CEO of M&A West, on related charges.
“Many people invest much of their life savings in stocks, and are therefore vulnerable to schemes such as this to defraud them out of their hard-earned money,” said United States Attorney Kevin V. Ryan. “The integrity of the public securities markets is of paramount importance to the millions of shareholders, large and small, who invest for their futures in the companies traded on those markets. We are gratified by this conviction against those who commit securities fraud by manipulating stock prices for their own gain.”
“This verdict serves as a continuing reminder to those in the business and investment arena that the FBI remains committed to the pursuit of sophisticated and complex stock manipulation schemes. The FBI continues to dedicate resources to these types of white collar criminal investigations.”
At one time, the combined market capitalization of M&A West, Virtualender.com, and Digital Bridge exceeded $800 million, before the stocks’ prices collapsed in 2000.
The jury hung on one count of conspiracy to commit securities fraud, and acquitted on one count of money laundering. The court has not set a date for Ms. Gilak’s sentencing. The maximum statutory penalty for the securities fraud count is 10 years and 20 years for each count of money laundering, as well as a fine of $500,000 or twice the value of the property involved, plus restitution. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant United States Attorneys Timothy Crudo and Candace Kelly prosecuted the case with the assistance of Robin Barber, Tyle Doerr and Rawaty Yim.
Case # CR-01-0325 VRW.
A copy of this press release may be found on the U.S. Attorney’s Office’s website at www.usdoj.gov/usao/can.
Electronic court filings and further procedural and docket information are available at https://ecf.cand.uscourts.gov/cgi-bin/login.plhttps://ecf.cand.uscourts.gov/.
Judges’ calendars with schedules for upcoming court hearings can be viewed on the court’s website at www.cand.uscourts.gov.
All press inquiries to the U.S. Attorney’s Office should be directed to Luke Macaulay at (415) 436-6757 or by email at [email protected]