British Columbia residents Vincenzo Carnovale, 44, with dual Canadian and Italian citizenship, and Amar Bahadoorsingh, 51, with dual Canadian and UK citizenship, are charged with multiple offenses under the US Securities Act.
The commission alleges an inventory handling system – commonly referred to as a pump and dump – with various connections in Vancouver.
“Their goal,” the commission said, “was to secretly take control of loosely traded microcap companies, hire stock promoters to generate demand for their stocks, and then profit from the illegal sale of those stocks. shares to unsuspecting investors.
The scheme used a complex web of offshore accounts, as noted in prosecution documents filed by the commission with the U.S. District Court in Massachusetts on December 2.
Between 2016 and 2020, Carnovale and Bahadoorsingh took control of two U.S. penny stock corporations – Momentous Holdings Corp. and Uneeqo Inc. – by accumulating millions of shares and then allegedly concealing ownership of those shares in offshore accounts created by Sharp, which is facing criminal charges in Boston.
The SEC said the duo then prepared the company books, promoted the stocks with touts and marketing materials, and lied to brokers to illegally sell their stocks to unwitting investors in the public markets, the commission said. .
The SEC, which was assisted by the BC Securities Commission and the RCMP, as well as authorities in Curacao, Singapore, Hong Kong and Mauritius, described in detail how the alleged scheme worked.
For the alcoholic beverage company Momentous, Carnovale ordered that the share certificates be held by the Vancouver-based Sharp organization, dubbed the “Sharp Group” and the Swiss entity Wintercap SA, which claimed to be a manager of active. These entities “were in fact helping their clients to disguise control and ownership of the penny stocks.”
In addition, Carnovale and Bahadoorsingh reportedly transferred large portions of Momentous shares to nominated shareholder entities they controlled in Wyoming and Hong Kong.
Then, the SEC said, they fabricated documents to deceive the brokerage firms into selling the shares to the public. This was necessary to complete the program as the shares would otherwise be subject to trade restrictions as Carnovale and Bahadoorsingh were controlling entities of the company.
Finally, “Carnovale and Bahadoorsingh’s efforts to promote Momentous stocks resulted in a significant increase in the price and trading volume of the stock in April 2020”.
A similar process is said to have taken place for the mining company Uneeqo.
“Carnovale knew, or was unwise not to know, that the promoters he hired to praise Uneeqo did not disclose that he paid for the promotion,” the commission alleges.
The SEC obtained encrypted text messages from Carnovale to workers at Wintercap during the sale of a portion of the overvalued shares.
“Wintercap staff informed him, ‘You SOLD 115,000 UNEQ @ 0.2754”. Carnovale replied, “Have a bottle of wine with me tonight. He later added: “When I return to Europe in a few months, we dine on me limitlessly. “
It is not clear how much the pair profited in total, but the commission notes that $ 509,000 was taken from Uneeqo in September 2016 and $ 279,000 was taken from Momentous in April 2020.
The SEC is seeking permanent injunctions, reimbursement of allegedly misappropriated winnings, civil penalties and penny stock bars against Carnovale and Bahadoorsingh.
Bahadoorsingh also faces additional charges for another Sharp Group-related scheme that includes alleged illegal activity using Vancouver-based company Garmatex Holdings Ltd., later named Evolution Blockchain Group, as well as Vancouver public relations consultants.
The profits made by Carnovale and Bahadoorsingh in this case are part of a broader plan by Sharp and others, as claimed by the commission and the Federal Bureau of Investigation.
The commission says the Sharp Group was at the heart of a decade-long offshore scheme that made a net profit of $ 770 million for company executives (insiders), through the illegal trading of more than one billion dollars in shares in hundreds of listed companies in the United States.
Sharp and his associates Courtney Kelln, 41, of Surrey, Zhiying Yvonne Gasarch, 49, of Richmond, and Canadian Avtar Dhillon, 60, living in Long Beach, have been charged with fraud and conspiracy to commit a crime. fraud.
British Columbia residents Paul Sexton, Graham Taylor and Mike Veldhuis face related civil charges from the commission.
The US Department of Justice issued an arrest warrant for Sharp and froze his assets. They are now proceeding with default judgments against him because he has not responded to the authorities.