A Cobb County man and two accomplices were sentenced to prison Thursday after their conviction on federal fraud charges for a “pump-and-dump” stock scam that cheated thousands of investors out of more than $44 million, authorities said.
“By issuing false information about the company’s assets, the defendants lured victims into purchasing stock at artificially high prices. While the defendants got rich, victims lost millions,” U.S. Attorney Sally Quillian Yates said in a news release issued Thursday.
Benjamin Stanley, 48, of Kennesaw was sentenced to 16 years in a penitentiary after he was convicted by a federal jury for the scheme involving Conversion Solutions Holdings Corp., of which he was co-founder and chief operating officer.
The three defendants also were ordered to pay $44,025,620 restitution to their victims – more than 5,000 investors who had bought stock in their company, only to learn that the extravagant claims that had been made for it were bogus.
The scheme involved the issuance of press releases, beginning about July 2006, saying Kennesaw-based Conversion Solutions owned or controlled foreign sovereign bonds issued by Venezuela and Finland worth billions of dollars and paying tens of millions of dollars in annual interest, prosecutors said.
“In October 2006, CSHC issued an annual report claiming as much as $800 million in assets, $500 million of which was in the form of foreign sovereign bonds as stated in at least some of the press releases,” the U.S. Attorney's news release stated. “CSHC's anticipated income included $19,869,792 in interest revenue from those bonds.”
In truth, the company had few, if any, assets, did not control foreign bonds and had little in the way of revenue or profits, prosecutors said.
The company’s shares jumped from less than $1 a share in August 2006 to between $3 and $4 a share that October. During this time, the three defendants transferred stock to family members and others, who sold shares in the open market at artificially inflated prices, prosecutors said.
Also sentenced Thursday were Rufus Paul Harris, 43, of Oklahoma City, founder and CEO of Conversion Solutions. Harris, who fled last May while his trial was under way and was later captured by the U.S. Marshal’s Service in Utah, got 23 years in prison.
A jury convicted Harris and Stanley – Harris, in absentia – May 26. Darryl Horton, 50, of Okemos, Mich., pleaded guilty to mail fraud before the jury returned its verdict and was sentenced to 4 ½ years in prison. Horton had been chief financial officer of the company.
About the Author
