A Venice man and the controller of a Santa Monica-based company are among 14 people who have been charged with allegedly manipulating stock prices in a scheme that led to more than 20,000 investors losing over $30 million.
Two grand jury indictments unsealed Feb. 13 allege that the stock manipulations occurred in two separate, large-scale fraud schemes.
One 32-count indictment led to the Feb. 13 arrests of nine alleged conspirators, including Ari Kaplan, 40, of Venice, the nephew of a Westwood man who controlled the London Finance Group, Ltd.; and Grover Henry Colin Nix IV, 39, who controlled the Santa Monica-based Calbridge Capital, LLC, which purpoted to be a “boutique investment banking firm,” according to the U.S. Attorney’s Office.
The indictment accuses the defendants of charges such as concealing control of the stock by purchasing and transferring shares to offshore accounts; fraudulently inflating the prices and trading volumes of the companies’ stocks through “slick” marketing campaigns; and coordinating the sale of the companies’ shares at the peak of the fraudulently manipulated market, said Thom Mrozek, spokesman for the U.S. Attorney’s Office in Los Angeles.
According to court documents, the defendants are alleged serial market manipulators who carried out several fraudulent deals each year, each of which generated several million dollars. The defendants are accused of generally targeting marginal companies operating in areas they believed could be touted as generating breakthroughs or deals that would explain sudden increases in trading volume and price.
Such companies were purportedly involved in pharmaceuticals, hair restoration, green technologies, entertainment, oil and gas development, and e-commerce websites, Mrozek said.
“This case has dismantled a far-reaching stock market manipulation scheme run with ruthless efficiency and operated with one goal in mind – to steal money from the investing public,” said United States Attorney André Birotte Jr. “This type of predatory behavior cheats the average investor, erodes overall confidence in the markets, and has a devastating impact on companies and their employees.”