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Press Release

Five Additional Defendants Charged in Securities Fraud Conspiracy

For Immediate Release
U.S. Attorney's Office, Southern District of Texas

HOUSTON – Five additional individuals have been charged for their role in a $6.8 million securities fraud “pump-and-dump” conspiracy, announced Acting U.S. Attorney Abe Martinez.

 

A federal grand jury returned the original indictment Sept. 15, 2016, charging Andrew Ian Farmer, 38, and Thomas Galen Massey, 46, for their roles in a securities fraud scheme involving the stock of Chimera Energy Corp.

 

A superseding indictment was returned by the grand jury on April 26, 2017, and charges five new individuals for their roles in the Chimera fraud - Eddie Douglas Austin Jr., 66, Carolyn Price Austin, 62, and Charles Earl Grob Jr., 37, all of Houston; John David Brotherton, 57, of League City; and Scott Russell Sieck, 58, of Winter Park, Florida. All five new defendants are charged with one count of conspiracy to commit wire fraud and nine counts of wire fraud.

 

Brotherton and Grob made their initial appearances this afternoon, at which time the indictment was unsealed. Carolyn Austin and Eddie Austin are expected to make their appearances in federal court before U.S. Magistrate Judge Frances Stacy at 2:00 p.m. Thursday, May 4, while Sieck is expected to appear in Houston sometime next week.

 

In a typical “pump-and-dump” fraud scheme, the perpetrators publish false and misleading information about a company in order to fraudulently inflate the price of the stock. The perpetrators then sell the stock to unwitting investors at the inflated prices.

 

According to the charges in this case, the conspiracy involved a scheme to defraud investors in Chimera Energy Corp. by publishing false and misleading information about the company. In the conspiracy, the defendants allegedly published press releases, public filings and public advertisements that falsely claimed Chimera had licensed a new technology called “Non-Hydraulic Extraction,” which purported to be a new method of extracting oil by fracturing without using water. The defendants also published false press releases claiming that they had a business relationship with Petroleos Mexicanos, aka PEMEX, the government-owned oil producing company of Mexico, according to the charges. As a result of the false claims, the defendants allegedly defrauded investors that purchased shares of Chimera Energy Corp. out of a total of approximately $6.8 million.

 

Conspiracy to commit wire fraud and wire fraud each carry a possible term of imprisonment of up to 20 years in federal prison and a possible 250,000 fine.

 

Massey pleaded guilty to his role on April 18, 2017, and is set for sentencing June 26, 2017. The remaining defendants are presumed innocent unless convicted through due process of law.

 

The FBI conducted the investigation with the assistance of the Securities and Exchange Commission and Financial Industry Regulatory Authority. Assistant U.S. Attorney Justin R. Martin is prosecuting the case.

Updated May 2, 2017

Topic
Financial Fraud