Several Men Sentenced for Securities Fraud Costing Investors More Than $1.5M
A federal judge sentenced several men over the past year for operating a "pump and dump" securities fraud involving a bogus business called NuTech Energy Resources in Gillette, according to the Wyoming U.S. Attorney's Office.
Investors lost more than $1.5 million in the fraud.
“The convictions and sentences imposed on the defendants are the result of a six-and-a-half-year investigation and prosecution, involving multiple federal law enforcement agencies, that showed these defendants defrauded investors in Wyoming and around the world,” Acting U.S. Attorney Nicholas Vassallo said.
“Our securities laws are designed to give investors the truthful disclosures they need and deserve to make their individual investment decisions," Vassallo said.
The most recent sentences happened last week when U.S. District Court Judge Alan Johnson sentenced Justin Wallace Herman, 51, of Canonsburg, Pennsylvania, to seven years three months imprisonment followed by three years of supervised probation. Johnson also ordered Herman to pay a $700 special assessment and $158,878.86 in restitution.
The judge also sentenced Charles "Chuck" Winters Jr., 61, of Bradenton, Florida, to four years six months imprisonment followed by three years of supervised probation. Johnson also ordered Winters to pay a $500 special assessment and $158,878.86 in restitution.
A jury convicted them of securities fraud, conspiracy and aggravated identity theft last October after a three-week trial.
Co-defendant Robert “Bob” Mitchell was charged with Herman and Winters, and he pled guilty to mail fraud and conspiracy to commit securities fraud. He was sentenced last October to five years five months imprisonment for his role in the NuTech fraud and a related investment fraud.
Florida attorney Ian Horn was charged and tried with Herman and Winters, but he was acquitted of fraud crimes. However, he was convicted of perjury for making a material false statement while testifying before the grand jury investigating the NuTech fraud.
In January, Horn was sentenced to two years’ probation with six months’ home confinement and fined $5,000.
The defendants' scheme started in January 2015 when they bought control of a publicly traded shell company called EcoEmissions Solutions Inc.
They changed the company’s name to NuTech Energy Resources and sold the common stock under the ticker symbol NERG.
The "pump and dump" securities fraud then began, according to court documents and evidence presented at trial.
This fraud involves conspirators manipulating demand for a stock and the stock’s price, and then selling their worthless shares to the public at the artificially high price.
The conspirators published false information -- on a website, in press releases and emails -- that the Gillette-based NuTech operated gas wells used a patented technology.
In reality, NuTech had no business, no revenue, and no paid employees.
Herman and Winters used altered, backdated and forged documents to acquire 13 billion free-trading shares of NuTech common stock.
They and their co-conspirators then artificially inflated the market price of the stock by manipulative trading and publishing false and misleading information.
When the market price increased based on this false information, the conspirators sold their worthless NuTech shares to innocent investors, including investors in the United States and other countries.
Ruth Mendonça, Inspector in Charge of the Denver Division of the U.S. Postal Inspection Service, said this case should warn criminals about the consequences for using the U.S. Mail to defraud people.
This case was investigated by the U.S. Postal Inspection Service and the U.S. Department of Interior’s Office of Inspector General. Assistant U.S. Attorney Eric Heimann and former Assistant U.S. Attorney Thomas Szott prosecuted the defendants. The Criminal Prosecution Assistance Group of the Financial Industry Regulatory Authority assisted in the investigation and prosecution.