U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21862 / February 18, 2011
Securities and Exchange Commission v. Jonathan R. Curshen, et al., Civil Action No. 1:11-cv-20561 (S.D. Fla.) (JLK)
SEC Charges Seven in $7 Million, International Pump-and-Dump Fraud
Jonathan R. Curshen’s Offshore Asset-Protection Company, Red Sea Management, Allegedly Effected the Manipulative Trading
Today, the Commission filed a complaint against
for their respective roles in a fraudulent pump-and-dump scheme in the common stock of CO2 Tech Ltd. that was carried out from late 2006 through April 2007. According to the complaint, the defendants’ coordinated misconduct enabled them to sell CO2 Tech stock at artificially inflated prices, resulting in profits of over $7 million. Defendant Ricci simultaneously offered to settle with the Commission in a consent submitted for the Court’s consideration.
According to the complaint, CO2 Tech Ltd. was a sham company without significant assets or operations whose stock prices were quoted in the Pink Sheets. The complaint alleges that CO2 Tech falsely touted business relationships that the company had not formed, including a relationship with the Boeing Company when in fact there had been no communications, correspondence or understandings between CO2 Tech and Boeing.
According to the complaint, Weinbaum and Zigdon were Red Sea clients, who initiated the pump-and-dump of CO2 Tech as follows:
The complaint alleges that after Weinbaum hired Red Sea, Weinbaum directed Red Sea stock traders Ricci’s and Salazar’s sales of the stock, and Ricci and Salazar placed multiple layered orders to sell CO2 Tech stock -- thereby creating the false appearance that the market for the stock was deeper than it actually was.
The complaint alleges that Curshen, Ricci, Salazar, Weinbaum, Zigdon, and Krome violated Section 5(a), (c) and 17(a) of the Securities Act of 1933 (the “Securities Act”) [15 U.S.C. §§ 77e(a), (c), and 77q(a)] and Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder [15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5]. Weidenbaum is charged with aiding and abetting Weinbaum and Zigdon’s violations of Exchange Act 10(b) and Rule 10b-5. In its complaint, the SEC is seeking permanent injunctions, accountings, disgorgement of ill-gotten gains plus prejudgment interest, civil money penalties, and penny stock bars against all defendants. Without admitting or denying the allegations in the complaint, Ricci offered to accept an injunction against future violations of these provisions and a penny stock bar.
The Commission acknowledges the assistance of the Fraud Section of the Criminal Division of the U.S. Department of Justice, the Federal Bureau of Investigation, and the U.S. Postal Inspection Service whose attorneys and investigators conducted a parallel criminal investigation, which led to the filing of felony charges today against certain of these defendants. The Commission further acknowledges the assistance of the Financial Industry Regulatory Authority and several foreign law enforcement agencies that provided substantial support to this investigation. In particular, the Commission expresses its appreciation for the support of the Costa Rican Police, British Columbia Securities Commission, Israel Securities Authority, United Kingdom Financial Services Authority, and The City of London Police.