The SEC charged more than a dozen penny stock promoters and their companies with securities fraud for their roles in various kickback schemes aimed at manipulating the volume and price of microcap stocks and illegally generating stock sales.  The SEC worked closely with the U.S. Attorney's Office in Florida and the FBI in these separate schemes that were uncovered through FBI sting operations. 

According to the SEC's complaints, the schemes generally involved the payment of kickbacks to purportedly corrupt pension fund managers or stockbrokers, who would use their clients' accounts to purchase the publicly traded stock of microcap issuers controlled or promoted by the individuals and companies charged in this complaint.  Unbeknownst to the promoters and insiders, they arranged these illegal transactions with undercover FBI agents or confidential sources participating in undercover operations.

The following individuals and companies allegedly perpetrated the various kickback schemes:

    1.  Larry Wilcox.  Remembered for playing the role of Officer Jonathan "Jon" Baker on CHiPs, he perpetrated interrelated kickback schemes with 2 other penny company execs.  Anthony Mellone, CEO of Tri-Star Holdings, began the process by paying an illegal kickback to a purported employee pension fund trustee who was to purchase 40 million restricted shares of Tri-Star stock.  Days later, Mellone paid another kickback for a purchase of 50 million restricted shares of stock. The counterparties were undercover FBI agents and an FBI cooperating witness. Wilcox and others followed suit, using Mellone's plan.

    2.  Jean R. Charbit, Tzemach David Netzer Korem.  They engaged in a fraudulent kickback scheme to manipulate the stock of a microcap company so they could then sell their own shares at an artificially inflated price.  Charbit, a stock promoter, paid an illegal kickback to a purported corrupt stock broker - another undercover FBI agent - to induce him to purchase $300,000 worth of stock in the microcap company for his clients' discretionary accounts.  Korem drafted press releases for the penny stock company and served as its transfer agent through his company, First Public Securities Transfer.  Korem, as the penny stock company's transfer agent, issued the stock certificate for the kickback.

    3.  Scott R. Sand.  As CEO and Chairman of Ingen Technologies, he paid illegal kickbacks to an FBI undercover agent and a cooperating witness, who respectively portrayed an employee pension fund manager and his associate.  The managers were to purchase millions of restricted shares of Ingen stock. Sand also issued millions of shares of Ingen stock to the associate in exchange for acting as a middleman in the scheme.  Sand told the purported manager and associate that he was trying to generate the appearance of market interest in his company, induce public purchases of its stock, and ultimately increase the stock's trading price.

    4.  Jeffrey Galpern.   This stock promoter in Boca told a cooperating FBI witness that he held 4 million shares of stock in a Las Vegas-based microcap company and wanted to increase its value.  Once the price spiked, he planned to sell his own shares of the stock.  He offered to promote the stock through a promotional website, and indicated that properly-timed press releases would sufficiently disguise any spike in trading volume by making it appear they were the reason behind it.  Galpern intended to repeat the scheme at larger volumes and told the cooperating witness they could "continuously make money" through such a fraud.

    5. Bruce Palmer.    He paid an illegal kickback of 30 million shares of his company's restricted stock - AccessKey IP, Inc. - to a purported corrupt stock broker - an undercover FBI agent - so he would purchase 90 million shares of AccessKey stock in order to generate the appearance of market interest in Palmer's company.  Palmer attempted to conceal the kickback by issuing the shares to the broker's (fictional) girlfriend and drafting 3 AccessKey press releases to provide a reason for the anticipated higher-than-normal trading volume created by the large purchase. 

    6.  John "Buckeye" Epstein, Steven Humphries.   This pair of Texas execs at Earthworks Entertainment and The Fight Zone paid illegal kickbacks to a purported trustee of an employee pension fund so the trustee would purchase 40 million restricted shares of Earthworks and 200 million restricted shares of Fight Zone stock.  They attempted to conceal the kickback by entering into a consulting agreement with a phony company the trustee purportedly created solely for the fraud.  However, the corrupt fund trustee and the trustee's friend who helped arrange the deal were actually undercover FBI agents.   [SEC PR 10-187, 10/7]