White Collar Crime News

Texas Attorney Convicted for Role in Pump-and-Dump Stock Schemes January 31, 2010

A securities attorney was convicted this week by a federal jury in Alexandria, Va., for participating in multi-million dollar pump-and-dump stock manipulation schemes. Phillip Windom Offill Jr., of Dallas, was indicted on March 12, 2009, and was found guilty of one count of conspiracy to commit registration violations, securities fraud and nine counts of wire fraud.

Offill, an attorney in Dallas and a former attorney with the SEC, was retained by David Stocker, a Phoenix attorney who pleaded guilty in March 2009 in the Eastern District of Virginia to conspiracy to commit securities fraud. Ffrom approximately March 2004 through October 2004, Offill and Stocker evaded federal securities registration requirements and provided co-conspirators with millions of unregistered and “free-trading” shares of nine companies’ common stock that the co-conspirators could not have otherwise legally obtained. Many of the shares were subsequently sold by co-conspirators to investors in the general public. By evading the registration requirements, the co-conspirators were able to hide from the investing public the actual financial condition and business operations of the companies. The companies included Emerging Holdings Inc.; MassClick Inc.; China Score Inc.; Auction Mills Inc.; Custom-Designed Compressor Systems Inc.; Ecogate Inc.; Media International Concepts Inc.; Vanquish Productions Inc.; and AVL Global Inc.

In connection with Emerging Holdings, MassClick and China Score, evidence at trial showed that Offill knowingly participated in a conspiracy known as a “pump-and-dump” scheme to manipulate the price of these companies’ securities. Co-conspirators falsely manipulated the price and volume of some of the companies’ stock by making materially false and misleading statements in press releases and in spam e-mails to tens of millions of e-mail addresses throughout the United States in an effort to create artificial demand for the three companies’ stock. After fraudulently “pumping” the market price and demand for the companies’ stock, co-conspirators “dumped” shares by selling them for large profits to the general investing public in the over-the-counter market through listings on Pink Sheets, an inter-dealer electronic quotation and trading system. These shares were purchased by unsuspecting investors, including investors in the Eastern District of Virginia, and were often rendered virtually worthless.

Ten other defendants have pleaded guilty and eight of them have been sentenced in federal court in Alexandria, Va., for their roles in related stock manipulation schemes. David B. Stocker will be sentenced on March 8, 2010. Kenneth Owen pleaded guilty to conspiracy to commit securities fraud and will be sentenced in federal court in Los Angeles on Aug. 25, 2010. Michael R. Saquella was sentenced to 10 years in prison; Justin Medlin was sentenced to six years in prison; Steven P. Luscko and Gregory A. Neu were each sentenced to five years in prison; Lawrence Kaplan was sentenced to three years in prison; Brian G. Brunette was sentenced to a one year in prison; Anthony Tarantola was sentenced to six months in prison; and Henry “Hank” Zemla was sentenced to three months in prison.

The case, which was referred by the Market Regulation Department of Financial Industry Regulatory Authority (FINRA), was investigated by the FBI and the U.S. Postal Inspection Service, with assistance from FINRA’s Criminal Prosecution Advisory Group.