SEC Ban's MKN's President's Husband PermanentlySEC permanently bans Vancouver's Adam 2015-08-18 11:42 ET - Street Wire Also Street Wire (U-*SEC) U S Securities and Exchange Commission Also Street Wire (U-HBPE) HBP Energy Corp by Mike Caswell The U.S. Securities and Exchange Commission has permanently banned Vancouver's Mitchell Adam from penny stocks over his role in the planned pump-and-dump of a purported oil company. The regulator claimed that he and others set up an elaborate plan to boost a U.S. listing named HBP Energy Corp. In obtaining the ban, the SEC cited his separate guilty plea to criminal charges of conspiracy to commit securities fraud and mail fraud. The ban is contained in an order handed down by New Jersey Judge Jose Linares on Aug. 11, 2015. In addition to permanently prohibiting Mr. Adam from participating in any offering of penny stocks, it bars him from committing any future violations. Mr. Adam did not contest the ban, agreeing to its terms to settle the SEC's case. Mitchell Adam LINKED IN Mitchell Adam For Mr. Adam, the ban is part of an effort to end legal troubles that began after his May 28, 2015, arrest at the George Bush Intercontinental Airport in Texas. U.S. authorities detained him there on sealed criminal charges filed in New Jersey. According to prosecutors, he and others, including fellow Canadian Kenneth David Stevenson, planned to manipulate HBP with a series of wash trades and cold-calls. After his arrest Mr. Adam was transported to New Jersey, where a judge eventually released him on a $250,000 appearance bond. (All figures are in U.S. dollars.) The terms of his release included surrendering his passport and living with his mother in Florida. The judge also ordered substance abuse testing and mental health testing, which are routinely required ahead of sentencing. Meanwhile, the SEC filed a separate civil complaint against him on May 26, 2015, in the District of New Jersey. The complaint identified Mr. Adam, 47, as a Canadian with an address in Vancouver's Dunbar neighbourhood. The SEC also named as a defendant Mr. Stevenson, a 55-year-old resident of West Vancouver. The final defendant was a well-known New York shell lawyer, Adam Gottbetter. The scheme, as described by the SEC, came about after Mr. Adam and Mr. Stevenson met Mr. Gottbetter in July, 2013. Mr. Gottbetter had run two recent manipulations, and was looking to arrange a third when he met the two Canadians, the SEC said. The men then came up with a plan to drive up the price of HBP Energy, a purported oil company, by using matched trades, spam and offshore call centres, the complaint stated. Traders that Mr. Gottbetter knew would carry out most of the market work, while Mr. Adam and Mr. Stevenson would set up the call centres and transmit the promotional material, according to the SEC. The plan, however, was seriously undermined before it even began. Unbeknownst to the men, a trader that Mr. Gottbetter was working with had begun co-operating with authorities. Mr. Adam and Mr. Stevenson later met the trader at a New York hotel to discuss the manipulation, the SEC said. The events at that meeting formed a substantial portion of the allegations against the men. The trader explained to them that he would use 32 accounts held by foreign nominees to "walk up" the stock. The idea was to create an "attractive but fake" stock chart, the SEC claimed. Around the same time, Mr. Adam would pay for a spam campaign and have call centres around the world start pitching HBP, according to the complaint. Once the stock started rising, Mr. Gottbetter, Mr. Adam and Mr. Stevenson would sell their shares and divide the proceeds amongst themselves using predetermined percentages, the complaint stated. The plan ultimately amounted to nothing, and the trader provided a substantial amount of information to law enforcement agents. Mr. Stevenson and Mr. Gottbetter were arrested in 2013 and 2014, and both pleaded guilty. (Their files remained sealed until after the arrest of Mr. Adam.) Mr. Stevenson later received one year of probation and the SEC permanently banned him from penny stocks as well. Mr. Gottbetter, meanwhile, received a sentence of 18 months in jail. Prosecutors claimed that he was the architect of the HBP manipulation, and that he had roles in two other promotions, including one that generated $12-million in proceeds. He is serving his term at FCI Miami, a low-security jail. Mr. Adam is scheduled to be sentenced on Oct. 27, 2015. The charges against him carry a maximum jail term of five years. Back home, Mr. Adam has had roles with dozens of TSX Venture Exchange companies. They include a period as president of Bonterra Resources Inc. and as president of Weststar Resources Corp. He was also the president of Oxford Resources Inc. until his arrest. 2015 Canjex Publishing Ltd. All rights reserved.