15 charged in Calif. stock manipulation scheme
LOS ANGELES (AP) — Fifteen people have been indicted on charges that they took part in a stock manipulation scheme that defrauded more than 20,000 people out of more than $30 million through investments in companies once touted by Pamela Anderson and Eric Roberts, authorities said Thursday.
Among those charged with conspiracy are a former Los Angeles County deputy district attorney and the head of a public relations firm.
A three-year investigation revealed a pump-and-dump scam, where stocks were heavily promoted through slick marketing campaigns and misleading news releases, boosting their prices before they were sold off to reap large profits.
One of the stocks was for a company called frogads.com, an online bulletin board for classified advertisements, which featured Anderson in an infomercial. Another company, GenMed, was touted by Roberts.
Anderson and Roberts aren't suspected of any wrongdoing and they didn't profit from the stock, authorities said.
"The defendants' alleged combination of celebrities, press releases, gimmicks and lies was similar to a how a magician deceives unsuspecting believers into an illusion," said Bill Lewis, the FBI's assistant director in charge in Los Angeles. "While operating the schemes alleged in the indictments, the defendants kept their audience captive until stock prices peaked, while investor money vanished into defendants bank accounts."
The investigation involved a series of wiretaps through which more than 60,000 calls and 24,000 text messages were intercepted by law enforcement.
Federal prosecutors said those charged carried out several fraudulent deals each year that generated millions of dollars and hid the profits in offshore accounts. If convicted, each of the defendants faces up to 100 years in federal prison.
One of the suspected ringleaders is Regis Possino, 65, who once worked as a Los Angeles County prosecutor. He was disbarred in the mid-1980s following a drug-related conviction.
A phone listing couldn't be found to reach Possino for comment, and court records didn't list an attorney for him.