Axius CEO Roland Kaufmann Pleads Guilty to Conspiracy to Pay Bribes in Stock Sales
|U.S. Department of Justice January 11, 2013|
WASHINGTON—Roland Kaufmann, CEO of Axius Inc., pleaded guilty today in Brooklyn for conspiring to bribe stock brokers, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Eastern District of New York Loretta E. Lynch.
Kaufmann, 60, a Swiss citizen, pleaded guilty before U.S. District Judge John Gleeson in the Eastern District of New York to one count of conspiracy to violate the Travel Act.
“Roland Kaufmann conspired to bribe stock brokers and fleece investors in Axius stock,” said Assistant Attorney General Breuer. “He took the crooked path and now faces the prospect of years in prison. Although he committed his crimes from outside the United States, U.S. authorities tracked him down, and he has now been held to account. This case shows our determination to prosecute all those who seek to corrupt U.S. securities markets.”
“Roland Kaufman sought to game the system with his scheme to bribe stockholders to help him artificially raise the price of his company’s stock,” said U.S. Attorney Lynch. “He reached across the ocean to insert his deception into U.S. markets, thereby placing investors at risk. We will continue to bring our resources to bear against anyone who would harm the integrity of United States capital markets for their own personal financial gain, even when those who try to exploit our investors are hatching their schemes from abroad.”
“The flagrant market manipulation engaged in by Kaufmann was designed to make him rich,” said George Venizelos, Assistant Director in Charge, FBI New York Field Office. “Absent the undercover agent, the scheme also would have made honest investors much poorer. The FBI is committed to policing the securities industry to prevent unjust enrichment for cheaters, victimization of honest investors, and the undermining of public confidence in market integrity.”
“This case demonstrates the value of a coordinated approach by law enforcement authorities,” said Richard Weber, Chief, Internal Revenue Service (IRS), Criminal Investigation. “As a result of the collaborative effort in this investigation, investors were protected from further financial harm. IRS-Criminal Investigation is always ready to lend its financial investigative expertise to the investigation of complex and sophisticated financial crimes.”
Kaufmann admitted to conspiring with co-defendant Jean-Pierre Neuhaus, another Swiss citizen, to violate the Travel Act by bribing stock brokers. Axius, which refers to itself as a “holding company and business incubator” that develops other businesses, is incorporated in Nevada, and its principal offices are in Dubai, United Arab Emirates. As part of the scheme, Kaufmann and Neuhaus, while located overseas, enlisted the assistance of an individual they believed had access to a group of corrupt stock brokers; this individual was in fact an undercover law enforcement agent. Kaufmann and Neuhaus believed that the undercover agent controlled a network of stockbrokers in the United States with discretionary authority to trade stocks on behalf of their clients.
According to court documents, Kaufmann and Neuhaus instructed the undercover agent to direct brokers to purchase Axius shares that were owned or controlled by Kaufmann in return for a secret kickback of approximately 26 to 28 percent of the sale price. Kaufmann and Neuhaus instructed the undercover agent as to the price the brokers should pay for the stock, and Kaufmann specifically instructed the undercover agent, in Neuhaus’s presence, that the brokers would have to pay gradually higher prices for the shares they were buying. Kaufmann and Neuhaus directed the undercover agent that the brokers were to refrain from selling the Axius shares they purchased on behalf of their clients for a one-year period. By preventing sales of Axius stock, Kaufmann and Neuhaus intended to maintain the fraudulently inflated share price for Axius stock. Kaufmann and Neuhaus agreed to sell approximately $3.5 million to $5 million worth of Axius shares through the undercover agent’s stock brokers.
Kaufmann and Neuhaus were arrested on March 8, 2012. On October 10, 2012, Neuhaus pleaded guilty to conspiracy to commit securities fraud and violate the Travel Act.
At sentencing, scheduled for May 17, 2013, Kaufmann faces a maximum penalty of five years in prison. As part of his plea agreement, Kaufmann agreed to forfeit $298,740 that victims lost as a result of the crime.
This case is being prosecuted by Trial Attorney Justin Goodyear of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Ilene Jaroslaw of the Eastern District of New York. The case was investigated by the FBI New York Field Office and the IRS New York Field Office. The department also thanks the Securities and Exchange Commission for its assistance in this matter.