A Camas resident is among the individuals charged in connection with securities kickback schemes.
James Wheeler, 51, chief executive officer of MicroHoldings US, Inc., has been charged with mail fraud and conspiracy to commit securities fraud.
The U.S. Securities and Exchange Commission has suspended trading in MicroHoldings and six other microcap companies involved in kickback-for-investment schemes. MicroHoldings is based in Vancouver.
If convicted, the defendants charged with mail fraud and wire fraud each face up to 20 years in prison followed by three years of supervised release and a $250,000 fine on each count. If convicted on the conspiracy to commit securities fraud charges, the defendants each face up to five years in prison followed by three years of supervised release and a $250,000 fine on each count.
The SEC also filed civil charges of securities fraud against Wheeler and three other individuals, alleging they defrauded investors through the use of kickbacks in financing transactions.
The criminal case charged 13 defendants who engaged in criminal activity in the midst of an undercover Federal Bureau of Investigation operation. According to the charges filed in U.S. District Court, the schemes involved secret kickbacks to an investment fund representative in exchange for having the investment fund buy stock in certain companies.
According to an SEC press release, the kickbacks were to be concealed through the use of sham consulting agreements.
“What the insiders and promoters did not know was that the purported investment fund representative was actually an undercover agent,” the release stated.
The charges follow a year-long investigation focusing on preventing fraud in the micro-cap stock markets. Microcap companies are small publicly traded companies whose stock often trades at pennies per share.
According to the press release, fraud in the microcap stock markets is of increasing concern to regulators as such markets have proven to be fertile grounds for fraud and abuse.
“This is, in part, because accurate information about microcap stocks may be difficult for the average investor to find, since many microcap companies do not file financial reports with the SEC,” the release stated.
The charges were announced Thursday by the SEC, the FBI and the U.S. Attorney for the District of Massachusetts.
