The Securities and Exchange Commission (SEC) recently charged a ring of eight individuals, including Izak Zirk de Maison (Zirk de Maison) who orchestrated the fraud (was named Izak Zirk Engelbrecht before taking the surname of his wife Angelique de Maison) for their roles in an alleged pump-and-dump scheme involving a penny stock. In a related action, the Federal Bureau of Investigation (FBI) and the United States attorney for the Northern District of Ohio announce the federal arrests of Izak Sirk De Maison and Stephen J. Wilshinsky (Wilshinsky).
The SEC alleges that Engelbrecht with others he enlisted to buy, sell, or promote stock in the Gepco Ltd (Gepco) company. Gepco is a Nevada corporation under the ticker symbol “GEPC.” Gepco was originally incorporated in June 2008, as Kensington Leasing, Ltd., a company that purported to “specialize in leasing equipment to a select clientele.” Thereafter, Gepco entered into a reverse merger with Gem Vest Ltd., in December 2013.
As part of the scheme, the SEC alleged that Zirk de Maison installed associates of his as officers and directors of Gepco. Collectively, the defendants controlled large blocks of shares of Gepco common stock while the de Maisons manipulated the market to create the appearance of genuine investor demand which allowed him and his associates to sell the stock at inflated prices making hundreds of thousands of dollars in profit.
According to the FBI, Zirk de Maison devised a scheme to defraud investors by paying undisclosed kickbacks to brokers, including Wilshinsky, in exchange for using their clients’ funds to purchase shares of the penny stock. The FBI complaint alleges that Zirk de Maison conspired with brokers, including Wilshinsky, to ensure that when he wanted to sell shares on the open market there would be an available buyer. Despite the typically low-volume trading in the stocks controlled by Zirk de Maison his orders were filled almost instantaneously. The FBI alleged that Zirk de Maison’s ability to obtain immediate fulfillment was because he conspired with brokers who had some discretion to make trades in investors accounts. Zirk de Maison then paid the brokers an undisclosed kickback of typically 50 percent of the total sale price in exchange for the brokers using the investor’s accounts.
The SEC alleges that the de Maisons brought at least six others into their scheme, each are charged in the SEC’s complaint. Those charged include Jason Cope, a longtime associate of Zirk de Maison with a past record of securities fraud with. Louis Mastromatteo who allegedly dumped more than 2.5 million shares of Gepco stock through a nominee into the public market for hundreds of thousands of dollars in profits that he then kicked back to Cope. Trish Malone who served as Gepco’s president, CFO, and secretary and allegedly used Gepco to issue stock to Zirk de Maison and others in order to conduct two unregistered distributions of the securities. Peter Voutsas to serve as Gepco’s CEO and chief investment officer and who allegedly made a materially misleading statement about Gepco so that the de Maisons could manipulate the market for Gepco’s stock. Ronald Loshin who served as Gepco’s chief creative officer who enabled de Maison to deceptively hide his own trading by allowing him to use a brokerage account held in Loshin’s name. Kieran Kuhn who allegedly promoted Gepco stock through his firm Small Cap Resource Corp.
Investors who have suffered losses may be able recover their losses through securities arbitration. The attorneys at Gana LLP are experienced in representing investors in cases of pump-and-dump penny stock schemes and when brokerage firms fail to supervise their representatives. Our consultations are free of charge and the firm is only compensated if you recover.