A 71-year-old man from Toronto has been sentenced to 27 months in a New York prison for his part in a multimillion-dollar ‘pump-and-dump’ scheme of more than a dozen penny stocks.
Julius Csurgo, who orchestrated these schemes with co-conspirators, pled guilty on May 27 in front of a U.S. district judge, who later sentenced him on Sept. 4. On top of his jail time, Csurgo was ordered to forfeit around US$9.6 million and sentenced to one year of supervised release.
In his guilty plea, the Canadian-Hungarian citizen admitted to securities fraud involving 19 different stocks.
In his elaborate scheme, Csurgo gained controlling interest of unrestricted stock and hid his ownership by distributing his shares to nominee entities through a Swiss corporation called Blacklight, S.A. Nominee entities are registered owners, either an individual or a corporation, who hold shares for others.
“While maintaining behind-the-scenes control over the shares and significant influence over company management, Csurgo and his co-conspirators funded promotional campaigns without disclosing their controlling interest or intent to sell,” officials out of the U.S. Attorney’s Office in the Southern District of New York wrote, adding that Csurgo intentionally hid the fact that nominee entities were funding these campaigns.
According to a previous release from the U.S. Attorney’s Office, the promotional materials used in these campaigns often had false and misleading claims about the issuer and left out material information.
Then, shortly after generating market interest (or even during the fact), Csurgo sold large percentages of his holdings and collected the money through an elaborate network of nominee shareholders that he controlled. Through that network, Csurgo would distribute the proceeds to his co-conspirators.
When they sold their shares, the prices were artificially inflated and Csurgo and his accomplices would realize multimillion-dollar gains in illicit profits. All the while the impacted companies’ share price would drop.
“This sentencing reflects a clear and unambiguous message: those who manipulate our markets and defraud investors will not escape justice,” U.S. Attorney Jamie McDonald said in a news release.
“Julius Csurgo manipulated U.S. financial markets, exploited shell companies, and engaged in deceitful promotions to enrich himself at the expense of unsuspecting investors.”
