Las Vegas, NVA joint investigation conducted by the Federal Bureau of Investigation (FBI) and the Securities and Exchange Commission (SEC) has uncovered an alleged stock fraud scheme that resulted in the arrests of five people.
The Sacramento Bee reveals that defendants Thomas Schroepfer and Charles Fuentes were alleged to have become embroiled in a kickback scheme, according to the complaint by the SEC. The two men are alleged to have approached a purported acquaintance of a pension fund manager and offered a 30 percent kickback in exchange for the purchase of 400,000 shares of stock. Schroepfer was identified as the president of SmokeFree Innotec Inc., a supplier of tobacco-less cigarettes.
The kickback scheme would be concealed via the procurement of a bogus consulting agreement. The alleged stock fraud is reported to have involved the intended purchase of restricted stock in microcap entities.
The SEC complaint also revealed that the two defendants in the scheme had offered a bribe to a stockbroker, who presumably intended to buy stock in the open market using his client's money—thereby committing stockbroker fraud.
It has since been learned, however, that the entire matter was a sting operation. The unseen manager of the pension fund was not a real entity. Other participants were FBI agents working undercover or cooperating witnesses.
Fuentes, a stock promoter, was charged along with Las Vegas-resident Schroepfer with conspiracy to commit securities fraud.
The SEC laid charges to three other individuals alleging stockbroker investment fraud. A marketing consultant working on behalf of an enterprise in Coconut Beach, Florida, was accused of creating a false and misleading Web site in an effort to encourage investor interest in the enterprise.
The SEC also charged two other men after they were alleged to have become active in a "pay-to-play" scheme that involved overtures to a stockbroker to buy company stock in exchange for a kickback.
Stock fraud often happens in the midst of an economic downturn. Participants in such alleged schemes may have seen their revenue shrink or are languishing in dire straits. Greed can also play a factor.
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