Score:   1
Docket Number:   SD-FL  1:17-cr-20883
Case Name:   USA v. Ahearn et al
  Press Releases:
A Colorado registered stock transfer agent and a California securities attorney were charged with conspiracy to unlawfully sell unregistered securities in connection with a scheme to fraudulently register shell companies with the U.S. Securities and Exchange Commission (SEC), issue a class of free-trading shares in the companies that the conspirators secretly controlled, and sell the shares to the investing public at a profit.  To date, twelve defendants have been charged in connection with the Shell Factory Fraud investigation.

 

            Randy A. Hummel, Executive Assistant United States Attorney, U.S. Attorney’s Office for the Southern District of Florida, Andrew W. Vale, Assistant Director in Charge, Federal Bureau of Investigation (FBI), Washington Field Office, and Robert F. Lasky, Special Agent in Charge, FBI Miami Field Office, made the announcement.

 

John Ahearn, 56, of Erie, Colorado and formerly of Miller Place, New York, and Andrew H. Wilson, 69, of Nevada City, California, were charged by criminal information with one count of conspiracy to unlawfully sell unregistered securities, in violation of Title 15, United States Code, Sections 77e(a)(1), 77e(a)(2), and 77x, and Title 17, Code of Federal Regulations, Section 230.144, all in violation of 18 U.S.C. § 371, in Case No. 17-20883-CR-KMW.  The case is assigned to U.S. District Judge Kathleen M. Williams in Miami.  Each defendant faces a maximum statutory sentence of five years in prison and a fine up to $250,000 or double the proceeds of the offense. 

 

Ten defendants were previously charged in connection with the Shell Factory Fraud investigation: James Schneider, Case No. 17-20712-CR-FAM; Myron Gushlak and Yelena Furman, Case No. 17-20713-CMA; David Lubin, Case No. 17-20508-CR-MGC;  Sheldon Rose and Ian Kass, Case No. 16-20706-CR-JEM; Steven Sanders and Alvin Mirman, Case No. 16-20572-CR-CMA; and Daniel McKelvey and Jeffrey Lamson, Case No. 16-20546-CR-RNS. 

 

According to court documents, from early 2007 through at least 2014, Sanders, McKelvey, Lubin and other conspirators would fraudulently create public companies, known as issuers, by filing documents with the SEC that falsely described the the companies and their share ownership.  These documents would indicate that the companies were controlled by a nominee, or straw chief executive officer (CEO).  The straw CEO would be listed as the owner of the control block, or restricted shares, but in reality the companies were controlled by the principals.  The principals would also create documents with the names of various shareholders for each company, to make it appear that these shares were owned by persons unaffiliated with the company.  These shares would later be classified as unrestricted or “free trading.”  Thereafter, the principals would sell the companies to criminal actors who would secretly obtain the control shares and the purported “free trading” shares, without disclosure to the SEC or the investing public.  This would allow the buyers to engage in stock manipulation schemes using the purported “free trading” shares.  According to the information, Ahearn and Wilson, both securities industry professionals, joined in the conspiracy in order to unlawfully obtain fees and future business from the issuers.

 

According to the information, Ahearn was the owner of Manhattan Transfer Registrar Co. (“Manhattan Transfer”), a stock transfer agent with offices in New York and Colorado.  Ahearn specialized in penny stock transfer services, and was responsible for keeping track of the status of shares (restricted or free trading) as well as share ownership.  Ahearn and Manhattan Transfer became the stock transfer agent for Entertainment Art, Inc. (“EERT”) in 2008, and became aware that the shares were listed in the names of straw shareholders but were in fact controlled by the principals.  During the conspiracy, according to the information, Ahearn agreed to assist Sanders, McKelvey and Lubin with transferring the shares of issuers they controlled, knowing that these shares were unlawfully classified as unrestricted.  By 2012, EERT was secretly controlled by Myron Gushlak, who was serving a federal prison sentence for a separate pump and dump scheme.  In approximately October 2012, Ahearn assisted with the unlawful transfer of the EERT shares to certain shell buyers, who changed the name to Biozoom, Inc. (“BIZM”) and, in May 2013, used the BIZM shares for a massive pump and dump stock swindle.  Ahearn assisted Sanders and McKelvey with stock transfer services with other issuers as well, for shares that Ahearn knew were secretly controlled by Sanders and McKelvey but were listed in the names of various nominee shareholders.

 

Wilson, according to the information, was an attorney licensed to practice law in California who authored false and fraudulent legal opinion letters for EERT, as well as certain other issuers at the request of Sanders and McKelvey.  These letters falsely stated that shares of the companies were owned by persons who were not “affiliates,” and were used by persons who acquired the shares to deposit them with brokers and unlawfully them to the investing public.  In reality, Wilson took his direction from Sanders and McKelvey, whom Wilson came to learn secretly controlled the companies.  In certain instances, Wilson performed so-called escrow services for the sale of shares, knowing that these share sales were part of the unlawful sale of all or nearly all of the shares of the companies but without the required disclosure to the SEC and the investing public.  The actions of Ahearn and Wilson, along with their conspirators, allowed the shares of the companies to be utilized for pump and dump stock swindles or other manipulation schemes.

 

Mr. Hummel commended the investigative efforts and coordination of the FBI’s Washington Field Office and Miami Field Office.  Mr. Hummel also thanked the SEC’s Miami Regional Office and Washington Home Office for their assistance.  The SEC previously filed parallel civil enforcement actions against McKelvey, Sanders, Mirman, Rose, Kass, Lubin, Schneider, Lamson and Wilson.  This matter is being prosecuted by Assistant U.S. Attorney Jerrob Duffy.

 

An criminal information merely contains allegations and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

 

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

Docket (0 Docs):   https://docs.google.com/spreadsheets/d/1aZVIk0SERi0NGj2w1bZ8IOQ4zRQAdf_TQPCKKE1a6rg/edit#gid=0
  Last Updated: 2020-09-18 06:23:50 UTC
Description: The fiscal year of the data file obtained from the AOUSC
Format: YYYY

Description: The code of the federal judicial circuit where the case was located
Format: A2

Description: The code of the federal judicial district where the case was located
Format: A2

Description: The code of the district office where the case was located
Format: A2

Description: Docket number assigned by the district to the case
Format: A7

Description: A unique number assigned to each defendant in a case which cannot be modified by the court
Format: A3

Description: A unique number assigned to each defendant in a case which can be modified by the court
Format: A3

Description: A sequential number indicating whether a case is an original proceeding or a reopen
Format: N5

Description: Case type associated with the current defendant record
Format: A2

Description: A concatenation of district, office, docket number, case type, defendant number, and reopen sequence number
Format: A18

Description: A concatenation of district, office, docket number, case type, and reopen sequence number
Format: A15

Description: The status of the defendant as assigned by the AOUSC
Format: A2

Description: A code indicating the fugitive status of a defendant
Format: A1

Description: The date upon which a defendant became a fugitive
Format: YYYYMMDD

Description: The date upon which a fugitive defendant was taken into custody
Format: YYYYMMDD

Description: The date when a case was first docketed in the district court
Format: YYYYMMDD

Description: The date upon which proceedings in a case commenced on charges pending in the district court where the defendant appeared, or the date of the defendant’s felony-waiver of indictment
Format: YYYYMMDD

Description: A code used to identify the nature of the proceeding
Format: N2

Description: The date when a defendant first appeared before a judicial officer in the district court where a charge was pending
Format: YYYYMMDD

Description: A code indicating the event by which a defendant appeared before a judicial officer in the district court where a charge was pending
Format: A2

Description: A code indicating the type of legal counsel assigned to a defendant
Format: N2

Description: The title and section of the U.S. Code applicable to the offense committed which carried the highest severity
Format: A20

Description: A code indicating the level of offense associated with FTITLE1
Format: N2

Description: The four digit AO offense code associated with FTITLE1
Format: A4

Description: The four digit D2 offense code associated with FTITLE1
Format: A4

Description: A code indicating the severity associated with FTITLE1
Format: A3

Description: The FIPS code used to indicate the county or parish where an offense was committed
Format: A5

Description: The date of the last action taken on the record
Format: YYYYMMDD

Description: The date upon which judicial proceedings before the court concluded
Format: YYYYMMDD

Description: The date upon which the final sentence is recorded on the docket
Format: YYYYMMDD

Description: The date upon which the case was closed
Format: YYYYMMDD

Description: The total fine imposed at sentencing for all offenses of which the defendant was convicted and a fine was imposed
Format: N8

Description: A count of defendants filed including inter-district transfers
Format: N1

Description: A count of defendants filed excluding inter-district transfers
Format: N1

Description: A count of original proceedings commenced
Format: N1

Description: A count of defendants filed whose proceedings commenced by reopen, remand, appeal, or retrial
Format: N1

Description: A count of defendants terminated including interdistrict transfers
Format: N1

Description: A count of defendants terminated excluding interdistrict transfers
Format: N1

Description: A count of original proceedings terminated
Format: N1

Description: A count of defendants terminated whose proceedings commenced by reopen, remand, appeal, or retrial
Format: N1

Description: A count of defendants pending as of the last day of the period including long term fugitives
Format: N1

Description: A count of defendants pending as of the last day of the period excluding long term fugitives
Format: N1

Description: The source from which the data were loaded into the AOUSC’s NewSTATS database
Format: A10

Description: A sequential number indicating the iteration of the defendant record
Format: N2

Description: The date the record was loaded into the AOUSC’s NewSTATS database
Format: YYYYMMDD

Description: Statistical year ID label on data file obtained from the AOUSC which represents termination year
Format: YYYY

Data imported from FJC Integrated Database
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