Former CEO of Chicago-Area Public Company Pleads Guilty in Market Manipulation Scheme
Litigation Release No. 24509 / June 21, 2019
Securities and Exchange Commission v. Andrew J. Kandelapas, No. 18-cv-02637 (N.D. Ill.)
United States v. Andrew J. Kandalepas, No. 19-cr-0027 (N.D. Ill.)
On June 11, 2019, Andrew J. Kandalepas, the former CEO, President and Chairman of the Board for Wellness Center USA, Inc. pleaded guilty to one count of securities fraud for engaging in a market manipulation scheme to artificially inflate the company's stock price. Kandalepas had previously consented to a judgment in a parallel enforcement action brought by the SEC alleging violations of the anti-fraud provisions of the federal securities laws.
On January 14, 2019, the United States Attorney's Office for the Northern District of Illinois filed a criminal information charging Kandalepas with two counts of securities fraud. According to the plea agreement, between December 2012 and June 2015, Kandalepas bought and sold shares of WCUI for the purpose of artificially inflating the stock price. Many of his trades occurred at or near the close of normal trading hours in a form of market manipulation known as "marking the close." According to the plea agreement, Kandalepas netted at least $136,176 in trading profits for his personal use.
On April 12, 2018, the SEC charged Kandalepas with, among other things, manipulating WCUI's stock and with making false and misleading statements in WCUI's SEC filings and press releases. On September 25, 2018, the United States District Court for the Northern District of Illinois entered a consent judgment against Kandalepas permanently enjoining him from violating the antifraud provisions of Sections 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the broker registration provisions of Section 15(a) of the Exchange Act. The judgment also bars Kandalepas from serving as an officer or director of a public company and from participating in penny stock offerings, and orders disgorgement and interest and penalties to be determined by the court. Kandalepas consented to the entry of the judgment without admitting or denying the allegations in the complaint.