Broker-Dealer, Attorneys, Stock Promoters and others charged in “Pump-and-Dump” Scam Involving Tradeshow Marketing Company and Pacific Blue Energy

The Securities and Exchange Commission is charging Canadian stock promoters James Hinton, John Kirk, and Benjamin Kirk, and their associates with employing misleading and false promotions to inflate trading in two microcap companies. As a result, they allegedly made millions of dollars after dumping their shares in a pump-and-dump scheme.

Also charged are California-based lawyers Wade Huettel and Luis Carillo, who allegedly assisted Kirk, Hinton, and Kirk in hiding their ownership stakes in the companies by putting together public filings that were misleading and giving legal opinions that were also intended to lead others astray, and Gibraltar Global Securities, which is a brokerage firm located in the Bahamas. The broker-dealer is accused of issuing misleading statements and fake affidavits that let one of the stock promoters sell shares of the company he was pushing in secret. Meantime, Carrillo Huettel LLP, the law practice of Luis and Carillo, was allegedly given stock sale proceeds disguised as a fake “loan” in secret.

The regulator contends the Luniel de Beer, the president of Tradeshow Marketing Company Ltd. and chairman of Pacific Blue Energy Corporation, was paid over $330,000 in secret kickbacks for his alleged involvement in the pump-and-dump scam. Pacific Blue President Joel Franklin, whom the SEC accused of misleading representations and playing a role in the stock sales being able to happen, has already settled the Commission’s charges against him. As for the others mentioned above (and in the SEC’s securities case), they are charged with violating US anti-fraud rules and laws, as well as US securities laws.

Pump-and-Dump Schemes
Pump-and-dump scams usually involve the promotion of company stock-typically microcap company stock-via misleading and false statements and they usually take place on the Internet. Social media, chat rooms, and bulletin boards are used to promote these false claims. Readers may be urged to buy a stock or sell a stock fast before the price drops. Telemarketers can also be used to promote the stock.

Promoters typically either present themselves as having insider scoop about an inevitable development or claim that they use a trustworthy combo of stock market and economic information to select certain stocks. Unfortunately, once these promoters get rid of their shares and stop marketing them-this is the “dump” portion of the scam-the investors that were duped end up suffering financial losses.

Per the SEC, to avoid becoming the victim of a pump-and-dump scam, consider that:
• If the stock offer is made online, assume it is a scam.
• If the stock is trading in the over-the-counter market, assume it is risky and easy to manipulate.
• A high-pressure pitch that tries to get you to buy/sell stock now is a red flag.

Our pump-and-dump lawyers
represent investors throughout the US.

Read the SEC’s Complaint (PDF)

Pump&Dump.con: Tips for Avoiding Stock Scams on the Internet, SEC

More Blog Posts:

Daniel “Rudy” Ruettiger Faces SEC Charges Over Pump-and-Dump Scam Involving Sports Drink Company, Stockbroker Fraud Blog, December 19, 2011

Pump & Dump Scam Alleged in $600 Million Lawsuit Against Law Firm Baker & McKenzie, Institutional Investor Securities Blog, April 13, 2011
FBI Arrests Texas Leader of Pump-and-Dump Scheme
, Texas Stockbroker Fraud Blog, March 23, 2011