Former CEO-President of San Diego-Based Company Charged in $28 Million Stock Fraud
Mark Lopez also Accused of Obstructing SEC Investigation by Hiding E-mails in Manila Folders Marked “Files Deleted” and “Not Released to SEC Subpoena (Delete)”
|U.S. Attorney’s Office January 22, 2013|
United States Attorney Laura E. Duffy announced today the unsealing of an indictment charging Mark Anthony Lopez—the former president and CEO of Unico Inc. (“Unico”)—with one count of conspiracy to commit securities fraud and two counts of obstructing justice. Unico is a San Diego-based mining company whose stock is publically traded. Lopez was arrested on January 17, 2013, by special agents of the FBI.
According to the indictment, Lopez conspired with New Jersey-based stock trader Mark Allen Lefkowitz (who previously pled guilty) to manipulate the share price and volume of Unico’s stock to benefit corporate insiders at the expense of shareholders. As a result of the fraud, the company issued approximately nine billion new shares of its stock that it did not register with the Securities and Exchange Commission (SEC). These new, unregistered shares diluted existing shares, causing their value to drop by as much as $7 million. At the same time, Lefkowitz received free-trading shares from Unico worth more than $28 million, which he sold to unsuspecting buyers on the open market.
To carry out the fraud, Lopez and Lefkowitz exploited Section 3(a)(10) of the Securities Act of 1933—a little-known provision that allows companies to issue unregistered shares of stock to settle “bona fide” debts. Lopez, on behalf of Unico, would enter into purported loan agreements with various shell corporations owned by Lefkowitz, most of which were based in the Turks and Caicos Islands. It was understood by the conspirators that Unico would purposefully default on the loan agreements so that Lefkowitz’s companies could initiate sham lawsuits against Unico.
Each and every one of these sham lawsuits would be brought by Florida-based lawyers in a Sarasota, Florida court. The Florida attorneys, even though they represented opposite sides in the lawsuits, would obtain their pleadings from a single Manhattan-based law firm that oversaw the sham lawsuits. Very soon after each lawsuit was filed—and typically within the very same week—Lopez and Lefkowitz would draft a written settlement agreement. The terms of the written settlement agreement would be extremely favorable to Lefkowitz. In short, Lopez would agree to settle Unico’s debt by issuing unregistered shares of stock worth, on average, seven times the debt that Unico actually owed. According to a secret side-agreement with Lopez, Lefkowitz would sell the shares on the open market to unsuspecting buyers and kick back a portion of the proceeds to Unico. This kickback would take the form of a new loan—which would have the added benefit of continuing the fraud scheme.
According to the indictment, Lopez also tried to obstruct an SEC probe into his misconduct by refusing to turn over e-mails, which he printed and concealed in two manila folders marked “Files Deleted” and another marked “Not Released to SEC Subpoena (Delete).” The indictment also alleged that Lopez redacted portions of an e-mail and tried to delete it from his computer and later lied to the SEC under oath during deposition testimony.
Lopez faces up to a total of 65 years in prison and $750,000 in fines. According to public filings, Lopez resigned his positions as CEO and president of Unico on June 9, 2012.
United States Attorney Duffy emphasized that this type of fraud attacks the very heart of our financial system. “The leaders of corporations—including and especially CEOs—owe a special duty to their shareholders. When these corporate leaders ignore that duty and use their positions to enrich insiders, it not only harms shareholders but also threatens to undermine confidence in our financial markets and slows our country’s ongoing economic recovery.” Duffy added that this investigation was initiated by special agents of the Federal Bureau of Investigation.
Lopez is expected to appear in court before the Honorable Barbara L. Major on January 23, 2013, at 9:30 a.m. for a bond hearing, and before the Honorable Irma E. Gonzalez, United States District Court Judge on February 22, 2013, at 2:00 p.m., for a motion hearing.
Defendant in Case Number 12CR5236-IEG
Mark Anthony Lopez
Summary of Charges
Conspiracy to commit securities fraud, in violation of Title 18, United States Code, Section 1349.
Maximum penalties: 25 years in prison, five years’ supervised release, a $250,000 fine, and a $100 special assessment.
Destruction, alteration and falsification of records, in violation of Title 18, United States Code, Section 1519. Maximum penalties: 20 years in prison, five years’ supervised release, a $250,000 fine, and a $100 special assessment
Federal Bureau of Investigation
An indictment itself is not evidence that the defendant committed the crimes charged. The defendant is presumed innocent until the United States meets its burden in court of proving guilty beyond a reasonable doubt.