A federal jury in Atlanta convicted two men in what prosecutors called a "pump and dump" scheme to defraud investors in Conversion Solutions Holdings Corp., based in Kennesaw.
The U.S. Attorney's office said Rufus Paul Harris, the company's former chief executive, fled in a dark-colored minivan from a local hotel on Monday before the trial was over. Friday evening he was still the subject of a nationwide manhunt.
After a two-week trial, Harris, originally from Adairsville but more recently from Oklahoma City, and Benjamin Stanley of Kennesaw were convicted on federal charges of securities fraud, wire fraud, and conspiracy. Stanley was present when the verdict was delivered Friday. A third defendant, Darryl Horton of Okemos, Michigan, pled guilty to conspiracy while the jury was deliberating.
Harris and Stanley could receive maximum sentences of 25 years in prison and fines of up to $250,000 for the securities fraud charge, the same penalty for the conspiracy charge, and 20 years in prison and a fine of up to $250,000 for each count of the wire fraud charges. Horton could receive up to five years imprisonment and a fine of up to $250,000. The men will be sentenced Aug. 18.
U.S. Attorney Sally Quillian Yates said the defendants, the three top officers in the company, pumped up the company's stock price with false claims and inflated financial statements while secretly transfering the stock to immediate family members who sold the stock at inflated prices.
Prosecutors said the fraud began in August 2006. In October 2006, the company's annual report claimed as much as $800 million in assets, $500 million of which was supposedly in the form of sovereign bonds from Venezuela and Finland.
CSHC's stock price on the open market more than tripled from less than $1 per share to more than $3 per share from August to October 2006. But prosecutors said the three defendants knew the company had little if any assets of any value.
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