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MAY THE FORCE(FIELD) BE WITH YOU! Trader Gets 15 Months for Pump-n-Dump Scheme
Herschel Knippa, the owner and head trader of Dallas-based Kenai Capital Management, was sentenced to 15 months in prison and ordered to pay $3.6 million in restitution, for his part in a pump-n-dump investment scheme that led to $131 million in investor losses. Knippa, 47, pleaded guilty in February.
Knippa was one of 9 individuals - including stock promoters, brokers and investor relations officials - who were accused last May of defrauding investors into buying ForceField Energy, an LED lighting company. From 2009 until April 2015, the defendants manipulated the stock by secretly trading it in undisclosed accounts, inflating trading volume to create a false sense of demand, and concealing kickbacks to stock promoters and brokers to tout it.
According to court papers, Knippa solicited more than $1.2 million in ForceField private placements from at least 10 investors, and with other conspirators tried to hide the scheme by using disposable cellphones and using cash for kickbacks. He also touted the now-essentially worthless stock on television without revealing his receipt of kickbacks.
Perhaps Knippa's 'tour de force' came during an appearance on Fox Business' "Varney & Co," when he lied to host Stuart Varney in response to the question if he owned ForceField: "You bet I do. I put my money where my mouth is."
In addition to Knippa, 4 other defendants - an IR professional and 3 brokers - have been sentenced, receiving prison sentences ranging from 3 months to 3 years.
May the FORCE(FIELD) BE WITH YOU!!!