Texas Attorney Convicted for Role in Pump-And-Dump Stock Manipulation Schemes

Jan 28, 2010, 18:18 ET from U.S. Department of Justice

WASHINGTON, Jan. 28 /PRNewswire-USNewswire/ -- A securities attorney was convicted today by a federal jury in Alexandria, Va., for participating in multi-million dollar pump-and-dump stock manipulation schemes, Assistant Attorney General  Lanny A. Breuer of the Criminal Division and U.S. Attorney Neil H. MacBride of the Eastern District of Virginia announced.

Phillip Windom Offill Jr., 51, of Dallas, was indicted on March 12,  2009, and today was found guilty of one count of conspiracy to commit registration violations, securities fraud and nine counts of wire fraud.

"It is a sad day when a former U.S. Securities and Exchange Commission  (SEC) attorney uses what he learned in the government to later defraud  the investing public," said Assistant Attorney General Lanny A. Breuer of the Criminal Division. "As this case shows, individuals who illegally manipulate our securities markets to line their own pockets will be brought to justice."

"As a former SEC lawyer, Mr. Offill knew the law - and he intentionally  broke it and tried to hide his crimes," said U.S. Attorney Neil H.  MacBride of the Eastern District of Virginia. "He and his co-conspirators made millions while innocent investors were left with stock in worthless companies. We are committed to pursuing these cases aggressively to protect the public and the integrity of the securities market."

According to court records and evidence at trial, Offill, an attorney in Dallas and a former attorney with the SEC, was retained by David Stocker, a Phoenix attorney who pleaded guilty in March 2009 in the Eastern District of Virginia to conspiracy to commit securities fraud.  According to the indictment, from approximately March 2004 through  October 2004, Offill and Stocker evaded federal securities registration requirements and provided co-conspirators with millions of unregistered and "free-trading" shares of nine companies' common stock that the  co-conspirators could not have otherwise legally obtained. Many of the  shares were subsequently sold by co-conspirators to investors in the  general public. By evading the registration requirements, the  co-conspirators were able to hide from the investing public the actual  financial condition and business operations of the companies. The  companies included Emerging Holdings Inc.; MassClick Inc.; China Score  Inc.; Auction Mills Inc.; Custom-Designed Compressor Systems Inc.;  Ecogate Inc.; Media International Concepts Inc.; Vanquish Productions  Inc.; and AVL Global Inc.

In connection with Emerging Holdings, MassClick and China Score,  evidence at trial showed that Offill knowingly participated in a  conspiracy known as a "pump-and-dump" scheme to manipulate the price of  these companies' securities. Co-conspirators falsely manipulated the  price and volume of some of the companies' stock by making materially  false and misleading statements in press releases and in spam e-mails to  tens of millions of e-mail addresses throughout the United States in an  effort to create artificial demand for the three companies' stock.  After fraudulently "pumping" the market price and demand for the  companies' stock, co-conspirators "dumped" shares by selling them for  large profits to the general investing public in the over-the-counter  market through listings on Pink Sheets, an inter-dealer electronic  quotation and trading system. These shares were purchased by  unsuspecting investors, including investors in the Eastern District of  Virginia, and were often rendered virtually worthless.

Offill, who was immediately remanded by U.S. District Judge Liam  O'Grady, faces a maximum penalty of five years in prison on the  conspiracy charge and 20 years in prison for each charged count of wire  fraud. He will also be subject to up to $15 million in forfeiture.  Sentencing has been scheduled for April 16, 2010, at 9 a.m., before  Judge O'Grady.

Ten other defendants have pleaded guilty and eight of them have been  sentenced in federal court in Alexandria, Va., for their roles in  related stock manipulation schemes. David B. Stocker will be sentenced  on March 8, 2010. Kenneth Owen pleaded guilty to conspiracy to commit  securities fraud and will be sentenced in federal court in Los Angeles  on Aug. 25, 2010. Michael R. Saquella was sentenced to 10 years in  prison; Justin Medlin was sentenced to six years in prison; Steven P.  Luscko and Gregory A. Neu were each sentenced to five years in prison;  Lawrence Kaplan was sentenced to three years in prison; Brian G.  Brunette was sentenced to a one year in prison; Anthony Tarantola was  sentenced to six months in prison; and Henry "Hank" Zemla was sentenced  to three months in prison.

The case, which was referred by the Market Regulation Department of  Financial Industry Regulatory Authority (FINRA), was investigated by the  FBI and the U.S. Postal Inspection Service, with assistance from FINRA's  Criminal Prosecution Advisory Group. The case is being prosecuted by  Trial Attorney Patrick Stokes of the Criminal Division's Fraud Section  and Assistant U.S. Attorney Ed Power of the Eastern District of  Virginia. The Department of Justice acknowledges the substantial  assistance of FINRA and the SEC in its investigation. It would also  like to thank the Virginia State Corporation Commission, Division of  Securities and Retail Franchising, for its assistance.

SOURCE U.S. Department of Justice