Of Note:

$3-million fraud ring that allegedly bilked 120 investors by inflating stocks on the TSX-Venture Exchange.



______________________________________________________________________________________________

11 charged in stock fraud scheme

By Brian Daly, QMI Agency

Feb 16, 2011

MONTREAL – The RCMP has arrested and charged 11 people from Montreal and Toronto in a $3-million fraud ring that allegedly bilked 120 investors by inflating stocks on the TSX-Venture Exchange.

The suspects were picked up last week and charged with fraud, gangsterism and conspiracy, the RCMP said Tuesday.

Alleged victims were recruited in newspaper ads and were persuaded to transfer their RRSPs into bank accounts controlled by the defendants in 2008 and 2009, according to the RCMP. Investors were promised they would earn tax-free sums from their accounts.

The alleged fraudsters are accused of secretly manipulating the stocks of 59 small Canadian companies. They would buy the stocks using clients’ money and then sell the shares back to the alleged victims at an inflated price while pocketing the difference, said RCMP Insp. Paul Garcide

“When you control the offer to buy and the offer to sell, you control the price,” Garside told QMI.

“Through that cycle of buying the stock cheap and selling it high to the clients, controlling both accounts, they end up emptying all the value from the accounts.

“Not everyone in the streets can do this. It takes someone who really knows the stock market.”

Garcide says the victims likely won’t recoup the money they lost.

The investigation began in 2008 after investors complained to Quebec’s financial watchdog, the AMF. The defendants, some of whom have prior criminal convictions, are to appear at the Montreal courthouse on March 11. One defendant is still at large.

The RCMP says four of the defendants are also charged in a separate Ponzi scheme in which people were defrauded of $140,000. Alleged victims in that case were promised a 55% return on their investment but their dividends were paid out using money from other investors


______________________________________________________________________________________________


Thanks for checking out my page. Red Mars

Why I Trade Penny Stocks - Part 27