SEC Charges Six Individuals in International Microcap Fraud Schemes
Washington, D.C.--(Newsfile Corp. - January 2, 2020) - The Securities and Exchange Commission today charged six individuals and their companies with participating in schemes that allegedly generated more than $35 million of illegal sales of stock in at least 45 microcap companies. The charges contained in two complaints reflect investigations by staff in the SEC’s New York and Boston offices, and assistance from multiple regulators outside the U.S.
According to one SEC complaint, Steve M. Bajic, a citizen of Canada and Croatia, and Rajesh Taneja, a Canadian citizen, helped shareholders secretly dump large quantities of microcap stock, coordinating the illegal stock sales with Kenneth Ciapala, a citizen of the U.K. and Switzerland, and Anthony Killarney, a U.K. citizen, and Swiss-based company Blacklight SA. The SEC’s complaint also alleges that Christopher McKnight, a Canadian citizen, and Aaron Wise, a U.S. citizen, fraudulently transferred, and hid the sources of, funds used to promote several of the microcap stocks.
A second complaint alleges that Ciapala and Blacklight facilitated the sale of millions of unregistered shares of EMS Find Inc. (EMSF) while the microcap stock’s price was being artificially inflated and dumped into the market. The complaint further alleges that Ciapala and Blacklight engaged in manipulative trading of EMSF stock. In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Ciapala and Blacklight.
“The charges here highlight our work with overseas securities regulators to root out players who use microcap markets to take advantage of U.S. investors,” said Paul Levenson, Director of the SEC’s Boston Regional Office. “Investors can help protect themselves from microcap fraud by using the tools and resources on Investor.gov.”
“As we allege in the complaints, the defendants evaded the securities registration requirements and engaged in other manipulative conduct, including by disguising the true sellers of securities, to defraud investors and generate illicit profits for themselves,” said Marc P. Berger, Director of the SEC’s New York Regional Office. “We will continue to pursue individuals and entities, whether located domestically or abroad, who undertake complex schemes to hide their fraudulent conduct.”
The SEC’s complaints charge Bajic, Taneja, Killarney, Ciapala, and their companies with violating the antifraud and registration provisions of the federal securities laws and with acting as unregistered broker-dealers. McKnight and Wise were charged with aiding and abetting the fraudulent stock sales and McKnight was also charged with violating an antifraud provision of the federal securities laws. The SEC is seeking permanent injunctions, disgorgement of allegedly ill-gotten gains plus interest, penalties, and penny stock bars.
The SEC’s investigations were conducted by Trevor Donelan, Rebecca Israel, Kathleen Shields, Eric Forni, Jonathan Allen, J. Lauchlan Wash, David Scheffler, Susan Anderson, and Amy Gwiazda in the SEC’s Boston Regional Office and by Joseph Darragh, Kristine Zaleskas, Paul Gizzi, Michael Paley, and Judith Weinstock in the SEC’s New York Regional Office.
The SEC appreciates the assistance of the U.S. Attorneys’ Offices for the Southern District of New York and the District of Massachusetts, the Federal Bureau of Investigation, the Alberta Securities Commission, the British Columbia Securities Commission, the Ontario Securities Commission, the Royal Canadian Mounted Police, the Cyprus Securities and Exchange Commission, the Hong Kong Securities and Futures Commission, the Malta Financial Services Authority, the Mauritius Financial Services Commission, the New Zealand Financial Markets Authority, the Panamanian Superintendencia del Mercado de Valores, the Monetary Authority of Singapore, and the Financial Industry Regulatory Authority.