Courtney Vasseur, a British Columbia Hells Angels member, and former Canadian Football League player David Sidoo are among 16 people accused of perpetrating a sprawling international pump-and-dump scam that lasted more than a decade and bilked investors out of an alleged US$194-million.
The U.S. Securities and Exchange Commission and the U.S. Attorney’s Office for the Southern District of New York are alleging that the defendants, almost half of which are Canadian citizens, manipulated the share prices of scores of U.S. penny stock companies over a period of about 15 years.
U.S. authorities alleged the defendants amassed controlling positions in worthless shell companies, and used stock promoters to pump up the shares to artificially high levels. Taking advantage of the huge spikes, the defendants pocketed millions at a time by cashing out at the top. Once the phony promotions ended, the share prices of the companies crashed, leaving ordinary investors holding worthless shares. The accused worked in the shadows, U.S. authorities said, by using aliases, communicating using encrypted messages and stashing money in offshore accounts.
The SEC said it was one “of the most complex microcap stock fraud schemes” it had ever seen.
None of the allegations have been proven in court.
Mr. Vasseur, a resident of Burnaby, B.C., and a member of the Hells Angels, was among those indicted on criminal charges by the Southern District. Mr. Vasseur, known as Arctic Shark, was charged alongside another Canadian resident, Curtis Lehner.
Mr. Lehner, known as Santa, and Mr. Vasseur allegedly set up the scams by gaining control of the shares of at least eight penny stock companies between 2016 and 2018, and overseeing misleading stock promotion campaigns. The pair pocketed tens of millions in ill-gotten gains, the U.S. Attorney’s Office said.
Mr. Vasseur and Mr. Lehner could not be reached for comment.
Most of the manipulated companies were based in Nevada, and traded on New York’s OTC Markets, a well-known penny stock trading platform. However, one of the companies that was tampered with was based in Vancouver and traded on the TSX Venture Exchange, as well as OTC. While several provincial Canadian securities regulators and law enforcement agencies assisted in the investigation, no Canadian authorities brought charges.
The SEC also brought civil charges against the former football player, Mr. Sidoo, and another Canadian defendant, Ronald Jacob Bauer. The men allegedly carried out pump and dumps related to North American Oil and Gas Corp. and American Helium Inc., and booked US$16.6-million in illegal profits.
The 62-year-old Mr. Sidoo once played for the Saskatchewan Roughriders and B.C. Lions. In 2020, Mr. Sidoo was implicated in the U.S. college admissions scandal and sentenced to three months in a U.S. prison after admitting he paid someone to take the SATs for two of his two sons.
Mr. Sidoo “used offshore omnibus vehicles and front companies to conceal the fact that he was the beneficiary of stock sales, and failed both to disclose his beneficial ownership and trading and to register his stock sales as legally required,” the SEC alleged.
Mr. Sidoo was also heavily involved in the “materially misleading” promotion campaigns behind the pump and dumps, the SEC said.
“The materials urged readers to buy the stock and do so quickly, to capitalize on supposedly realistic prospects of near-term, dramatic gains,” the regulator said.
Martin G. Weinberg, U.S. lawyer for Mr. Sidoo, said in a statement to The Globe and Mail that his client denies the allegations made by the SEC.
Mr. Bauer could not be reached.
A series of Globe and Mail investigations in 2020 and 2021 showed that Canada has a poor record of policing pump-and-dump scams compared to the United States, while Canadians play an outsized role in such schemes in the United States. The fragmented nature of regulation in Canada that sees 13 provincial and territorial regulators police the market, as opposed to only one in the United States, the SEC, is cited as a major reason why this country falls short.
Poor policing by junior stock exchange venues in Canada, compared with their counterparts in the U.S., is also a factor, as well as sluggish response times by the Investment Industry Regulatory Organization of Canada, the regulator in Canada that is the first line of defence against stock scams.
Three other Canadians charged by U.S. authorities in the stock manipulation scam were Domenic Calabrigo, known as Raider; Julius Csurgo; and Anthony Korculanic, known as Viper.
None of the accused could be reached for comment by The Globe.
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Niall McGee