MIAMI – At least 52 brokers, stock promoters and corporate officers were indicted on securities fraud, money laundering and other charges, culminating a two-year federal undercover operation, authorities said.
The multi-agency undercover operation, dubbed “Bermuda Short,” exposed fraudulent attempts to sell dlrs 200 million in securities from 23 publicly traded U.S. companies, according to the U.S. Attorney’s Office in Miami Thursday.
No investors lost any money through the scheme, officials said.
Undercover agents posed as mutual-fund traders, pretending to represent investors. The agents told the defendants that they could arrange to buy large blocks of stock at significantly above market prices with millions from their fictitious funds.
According to the indictments, the defendants wanted the fund to buy their securities and agreed to give the agents kickbacks on the stock sales.
The kickbacks generally amounted to several millions and were paid through offshore corporations and bank accounts, officials said.
Some of the defendants, including licensed securities brokers, were also accused of manipulating market prices of the stocks involved in the scheme.
They would specifically agree to arbitrarily increase the market price of a security by recommending and selling shares of the stock to their customers in exchange for a payoff.
Investigators also targeted corporate officers, stock promoters and others, posing as members of a Colombian drug cartel in need of laundering drug money.
Among those indicted were Michael Hepburn, a Bahamas-based accountant and operator of Barbados-licensed Keywest Swiss Investment Bank.
Federal agents arrested Hepburn on Thursday at Miami’s International Airport and charged with five counts of money laundering and conspiracy to commit money laundering, Bahamian police said. Hepburn’s office in the Bahamas refused to comment.
Police also arrested Paul Lemmon and Andrew Proctor, directors of the Bermuda-based Voyager Group Ltd. financial services firm. Both were charged with several counts of securities, mail and wire fraud.
Agents reached agreements with some of the defendants to launder nearly dlrs 1.4 million in purported drug money in exchange for millions in cash.
A U.S. Attorney’s spokeswoman declined to comment when asked if the defendants were targeted on suspicion they were breaking the law.
The suspects could get five years for each conspiracy charge, 10 years for securities fraud, and 20 years for money laundering.
