The U.S. Securities and Exchange Commission has settled on a US$667,653 civil judgment against B.C. resident Vincenzo Carnovale, who was alleged to have conducted a stock fraud scheme with the assistance of Vancouver-based offshore shell facilitator and former lawyer Fred Sharp.
In the judgment, announced Jan. 2, Carnovale neither admits nor denies the allegations of the Dec. 2, 2021 complaint from the commission (SEC) against him.
The settlement is similar to that of fellow defendant Amar Bahadoorsingh, also thought to have been residing in B.C. at the time of the civil fraud charges.
Bahadoorsingh was ordered to pay US$466,619 for his role in the alleged scheme, the commission stated on March 31, 2023.
In addition to the fine, including disgorgement of ill-gotten gains of $364,683, Carnovale is banned from penny stock trading in the U.S.
The commission had alleged Carnovale and Bahadoorsingh “secretly gained control of thinly traded microcap companies, hired stock promoters to create demand for their stock, and generated substantial illicit profits by selling the stock to unsuspecting investors.”
They also allegedly hid the fact that they controlled the securities of publicly traded companies Momentous Holdings Corp. and Uneeqo, Inc. and kept physical stock certificates with Sharp, his associates and a Switzerland-based entity (Wintercap SA) that held itself out as an asset manager.
“The Sharp Group concealed the identities of its clients like Carnovale by offering an array of services, including forming and providing offshore nominee companies,” the commission alleged in its complaint.
Carnovale recently lost an appeal at the Supreme Court of Canada and faces administrative charges from the Autorité des Marchés Financiers (AMF), Quebec’s equivalent of the B.C. Securities Commission (BCSC). The AMF alleges Carnovale and Sharp orchestrated a “pump and dump” in similar fashion to what the SEC alleged.
Carnovale, 46, is a dual citizen of Canada and Italy, and Bahadoorsingh, 53, is a dual citizen of Canada and the United Kingdom, according to the commission.
Profits realized by Carnovale and Bahadoorsingh in this case are part of a broader scheme conducted by Sharp and others, as alleged by the commission and Federal Bureau of Investigation.
The commission claims the Sharp Group was central to a decade-long offshore shell scheme that realized $770 million in net profit for company officers (insiders), via illegal trading of over $1 billion worth of shares in hundreds of U.S.-listed public companies.
The commission has secured judgments against several other British Columbians since bringing charges against Sharp in August 2021. However, many legal proceedings, including a criminal fraud case against Sharp and other B.C. associates, remain open. Sharp has since been found liable for the allegations against him and has been barred by the SEC and BCSC from further participation in the markets.