WASHINGTON—Two stock promoters, a securities lawyer, and a stock trader associated with a Costa Rican brokerage firm were sentenced today in the Southern District of Florida for their participation in a stock manipulation scheme that defrauded investors in a company called CO2 Technologies, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Chief Postal Inspector Guy Cottrell of the U.S. Postal Inspection Service (USPIS), and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office.
U.S. District Judge Richard W. Goldberg in Miami sentenced Michael Krome, 50, a securities attorney from New York, to 34 months in prison. Stock promoters Timothy Barham Jr., 44, of Tennessee; and Robert Weidenbaum, 46, of Miami, were sentenced by Judge Goldberg to 30 months and 26 months in prison, respectively. Krome, Barham, and Weidenbaum previously pleaded guilty to conspiring to commit securities fraud, mail fraud, and wire fraud. Krome was ordered to forfeit $17,490; Barham was ordered to forfeit $250,000; and Weidenbaum was ordered to forfeit $360,000.
In a separate but related case, former stock trader David Ricci, 41, was sentenced by Judge Goldberg to 18 months in prison. Ricci previously pleaded guilty to one count of conspiring to commit securities fraud, wire fraud, and mail fraud. Ricci had been employed as a stock trader at Sentry Global Securities, part of a company called Red Sea Management, an offshore brokerage firm that was based in San Jose, Costa Rica.
Two codefendants, Jonathan Randall Curshen, 47, the head of Red Sea Management and Sentry Global Securities; and Las Vegas stock promoter Nathan Montgomery, 31, were convicted of all counts after a two-week trial in January of this year. Curshen and Montgomery are scheduled to be sentenced by Judge Goldberg in Miami on May 11, 2012. Another codefendant, Ryan Reynolds, 40, of Dallas, awaits sentencing on his guilty plea to one count of conspiracy to commit securities fraud, wire fraud and mail fraud.
Weidenbaum and Barham admitted that they and others fraudulently “pumped” the market price and demand for CO2 Tech stock through false and misleading press releases. They also admitted to engaging in secret, coordinated trades of shares of CO2 Tech stock in order to create the appearance of legitimate buying interest by legitimate investors. Ricci admitted that as the stock promoters pumped the price of the stock, Ricci and his conspirators facilitated the “dumping” of shares through the trading desk at Red Sea Management and Sentry Global Securities by selling the shares to the general investing public. Weidenbaum and Barham also admitted that they and other conspirators were paid approximately $1 million in cash to buy CO2 Tech stock in order to inflate its price. The cash was delivered to them in Miami via a private jet from an airport outside New York. The stock manipulation scheme generated approximately $7 million in illegal proceeds.
Krome admitted that he participated in the conspiracy by evading federal securities registration requirements to facilitate the issuance of millions of unregistered and “free trading” shares of CO2 Tech that were used to execute the stock manipulation. According to the indictment, the plan was orchestrated by two Israeli nationals, Eric “Ariav” Weinbaum and Izahack Zigdon, who are both fugitives. Also charged was Ronny Salazar Morales, another trader at Sentry Global Securities and Red Sea Management. Salazar is also a fugitive.
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