The Department of Justice has set up a Web site for potential victims of the Red Sea Management $7 million stock manipulation scam. The department said that it would like to hear from persons who think they may have been victims of the Costa Rica-based fraud.
The Web site can be found HERE and the individual cases can be found under numbers 11-cr-20121 and 12-cr-20049.
This prosecution is part of efforts under way by the Financial Fraud Enforcement Task Force.
This is the case that involved Red Sea Management and Sentry Global Securities, both based in the Edificio Colón in San José. The principal of the brokerage firm has been sentenced in Miami to 20 years in prison for his role in a stock manipulation scheme that defrauded investors in a company called CO2 Technologies
The man, Jonathan Curshen, 47, was the principal of both firms. He was sentenced earlier this month by U.S. District Judge Richard W. Goldberg. Red Sea Management and Sentry Global Securities are companies located in San José, Costa Rica, that provided offshore accounts and facilitated trading in penny stocks.
In addition to his prison term, Curshen was sentenced to serve three years of supervised release and was ordered to forfeit approximately $7.3 million. Curshen and his co-defendant, Las Vegas stock promoter Nathan Montgomery, were convicted by a jury in January on all counts.
The evidence at trial showed that in January and February 2007, Curshen of Costa Rica and Sarasota, Fla., and Montgomery, of Las Vegas, were involved in a scheme to illegally manipulate the stock price of CO2 Tech.
Evidence at trial showed that Curshen’s and Montgomery’s co-conspirators controlled the outstanding shares of CO2 Tech, which were used in the stock manipulation scheme.
Montgomery and his conspirators engaged in coordinated trades in conjunction with the issuance of false and misleading press releases that were designed to artificially inflate the price of CO2 Tech shares to make it appear that it had significant business prospects.
According to these press releases, CO2 Tech purported to have a business relationship with Boeing to reduce polluting gases emitted from airplanes, when in fact CO2 Tech never had any business or relationship with Boeing.
According to the evidence at trial, Montgomery and his co-conspirators, Robert Weidenbaum, Timothy Barham Jr., Ryan Reynolds and others fraudulently pumped the market price and demand for CO2 Tech stock through these press releases and coordinated trades of shares of CO2 Tech stock in order to create the appearance of legitimate buying interest by legitimate investors. The evidence showed that as Montgomery and his conspirators pumped the price of the stock, Curshen and his conspirators facilitated the dumping of shares through the trading desk at Red Sea and Sentry Global Securities by selling the shares to the general investing public. The evidence showed that these shares, which became virtually worthless, were purchased by unsuspecting investors, including investors in the Southern District of Florida. The evidence showed that Montgomery, Weidenbaum, Reynolds and Barham were paid approximately $1 million in cash by their conspirators to participate in sham stock trades of CO2 Tech. The cash was delivered to them in Miami via a private jet from an airport outside New York.
The evidence further showed that, from approximately 2003 through 2008, Curshen operated Red Sea as a money laundering hub in Costa Rica that established bank accounts and brokerage accounts in the United States and Canada under false pretenses and through nominee owners. The evidence further showed that Curshen and his co-conspirators laundered the proceeds of the stock fraud from accounts in the United States to an account in Canada, all in an effort to conceal and disguise the nature and source of the proceeds.
Stock promoters Barham and Weidenbaum were sentenced to 30 months and 26 months in prison, respectively. Michael Krome, a securities attorney from New York, who participated in the conspiracy and evaded federal securities registration requirements, was sentenced to 34 months in prison.