West Coast Man Charged with Operating Stock Scheme That Caused $27 Million Loss to Investors
A criminal information was filed charging a West Coast man for a variety of charges for his role in an investment scheme that caused investors to lose $27 million, said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio, and Stephen D. Anthony, Special Agent in Charge of the Federal Bureau of Investigation’s Cleveland Office.
Izak Zirk De Maison, (aka Izak Zirk Engelbrecht, aka Zirk Engelbrecht), 58, of Redland Hills, California and Seattle, was charged with with one count of conspiracy to commit securities and wire fraud, two counts of securities fraud and securities violations, and four counts of wire fraud.
“Investors need to be confident that the price of stock reflects a company’s worth and not the market being manipulated,” Dettelbach said.
The information charges that from September 28, 2006, through September 18, 2014, De Maison, together with at least ten other co-conspirators, agreed to defraud investors and potential investors using five public companies that he created and controlled, including Lenco Mobile, Kensington Leasing, Ltd., Casablanca Mining, Ltd., Lustros, Inc., and Gepco Ltd.
It was a part of the scheme that De Maison issued millions of shares of the companies to himself and his co-conspirators at little or no cost and then artificially pumped the price and inflated the trading volume of the stocks through manipulative trading techniques, such as match trades, wash trades, and marking the close trades, according to the information.
De Maison used brokers, consultants, and boiler-room promoters in New York, Los Angeles, and Cleveland to peddle his shares in the companies to victim clients and investors, and paid these co-conspirators undisclosed commissions for selling off his shares at the inflated prices. Little or no portion of the investments went to fund the operations of the companies. Rather, De Maison and his co-conspirators treated their shares in the companies as currency, using most of the victims’ investments to enrich themselves, according to the information.
De Maison and his co-conspirators caused more than $54 million to be invested in the purchase of stock in the companies. De Maison caused a loss to investors in the amount of approximately $27 million from the scheme, according to the information.
This case is being handled by Assistant U.S. Attorneys Christos N. Georgalis and Adam Hollingsworth after an investigation by agents of the Federal Bureau of Investigation, with assistance from the Securities and Exchange Commission.
If convicted, the defendant’s sentence will be determined by the Court after a review of factors unique to the case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense, and the characteristics of the violation. In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
An information is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.