American authorities are alleging one of the largest and most complex stock manipulation schemes ever seen has roots in British Columbia, including possible connections to the Hells Angels Motorcycle Club.
The Federal Bureau of Investigation and U.S. Department of Justice announced on April 14 that they charged Courtney Vasseur, 41, and five other Canadians, including one other B.C. resident, with multiple counts of criminal securities fraud, conspiracy to commit securities fraud, wire fraud, conspiracy to commit wire fraud and conspiracy to commit money laundering for their part in a set of alleged fraud schemes involving over US$1 billion in illegal trading.
Vasseur is a Burnaby resident and was previously reported to be a full-patch member of the Hells Angels, according to the province’s anti-gang agency Combined Forces Special Enforcement Unit.
According to court filings, Vasseur resided on Government Road when his summons was issued. The U.S. Attorney’s Office said Canadian police arrested Vasseur, and the United States intends to extradite him.
Also charged was B.C. resident Curtis William Lehner and former B.C. residents Ronald Bauer and Craig Auringer, both now residing in the United Kingdom, according to officials. Canadians Anthony Korculanic, Domenic Calabrigo and Julius Csurgo were also arrested. Only Auringer remains at large among the Canadian defendants.
Others from Turkey, Monaco, Bulgaria, Cayman Islands, Spain and the British Virgin Islands were also charged.
Officials note the defendants are presumed innocent unless and until proven guilty.
“As alleged, for years, the defendants, collectively, made over $100 million by orchestrating ‘pump-and-dump’ stock manipulation schemes of publicly traded shares of U.S.-based issuers. These pernicious ‘pump-and-dump’ schemes made the defendants rich while causing real harm to ordinary, retail investors who were left swallowing the losses,” wrote U.S. Attorney Damian Williams.
The U.S. Securities and Exchange Commission (SEC) also issued numerous civil fraud charges related to the alleged scheme on April 18. The director of enforcement Gurbir Grewal claimed the defendants “orchestrated some of the most complex microcap stock fraud schemes ever charged by the SEC."
Among those facing civil but not criminal charges is Vancouver businessman David Sidoo. Those individuals allegedly generated $194 million in illicit proceeds.
A global scheme orchestrated from Vancouver, U.S. officials say
The alleged scheme used a global network of shell companies to conceal beneficial ownership of company shares and trades.
“While on paper the defendants and their co-conspirators had no connection to these companies, in reality, they exercised substantial control, including installing management at the companies, financing the companies’ operations, and funding payments for attorneys in order to prepare public filings,” noted the U.S. Attorney’s Office.
To complete the alleged scheme, the defendants "pumped" the stock by conducting trades between entities to artificially increase shares' trading volume and price. They also reportedly conducted promotional campaigns that frequently contained false and misleading claims about the companies. They allegedly used "boiler rooms" or call centres to cold-call investors to generate more interest in the shoddy stocks.
Vancouver was at least one base for promotions, according to officials. Vancouver resident Christopher McKnight, who the SEC charged with securities fraud in January 2020, is alleged to have assisted in the promotions with Vasseur and Lehner.
“By selling their shares while the share price was artificially inflated, the defendants and their co-conspirators were able to realize millions of dollars in illicit profits.
“The defendants and their co-conspirators then laundered the proceeds of the schemes back to themselves in a manner designed to conceal the source of the funds and/or the identity of the recipients. Such laundering was frequently accomplished through the use of fabricated invoices, contracts and agreements,” noted the U.S. Attorney’s Office.
Vasseur, according to the civil SEC complaint in the Southern District of New York, is alleged to be part of a sub-network that conspired to manipulate nine U.S. companies that were thinly traded and typically traded at less than $2 per share, granted they had few, if any, actual assets and business operations.
Vasseur's network, including Lehner and Calabrigo, is alleged to have generated US$35 million in illicit proceeds alone.
Vasseur, dubbed "Arctic Shark" by associates, also allegedly worked with former Vancouver lawyer and offshore shell company facilitator Fred Sharp. Sharp also faces criminal fraud charges in a separate indictment.
Sharp has an outstanding default judgment against him with the SEC, but a judge has yet to rule on it. Sharp is implicated as the central figure in over US$1 billion worth of illegal trading alleged by the SEC last August. Sharp allegedly coordinated numerous sub-networks or “control groups” to manipulate stocks in hundreds of U.S. public companies. It's unclear how Sharp's alleged activity overlaps with these newly-revealed schemes.
Officials specifically allege Vasseur manipulated the stock of a Nevada shell company called Bing Nation Inc., which purported to be offering televised bingo games. And it was Sharp and Lehner who are said to have controlled the corporations used to conceal Vasseur’s ownership of shares in Bing Nation.
Around the time the commission halted trading of Bing Nation, in April 2017, Vasseur was facing a charge of drug possession for the purpose of trafficking. In September 2017, he was acquitted.
In May 2013, Vaasseur’s car, driven by a friend, crashed into a bus in Vancouver. Police found the men unconscious with upwards of $28,000 worth of drugs in the vehicle. However, Justice Heather Holmes ruled there was reasonable doubt either man knew about the drugs.
Other possible Hells Angels links to defendants in court documents
This is not the first time U.S. officials have raised possible connections between Hells Angels and the alleged scheme in court filings.
In January, the commission revealed, in an amended complaint to the New York court, text communications between Sharp and associate Yvonne Gasarch, a Richmond resident, showing concerns about money laundering and keeping their operation concealed.
"On aug 12 u wrote a draft for grand yachts against cash. Cld u pls explain to me how this is legitimate payment? My concern is money laundering: hells angels gives us cash, we give them a draft to buy a boat. Later, boat is seized, polic investigate, find out charterhouse paid for it; visit us and ask why. What will u say?" Sharp tells Gasarch.
"Can we lend money to them? Thomas asks them sign loan agreement for us. Thomas will call me back," Gasarch replies.
Meanwhile, companies U.S. officials claim are controlled by Sharp also traded shares in a Canadian company called Emerald Health Therapeutics, once directed and controlled by Dr. Avtar Dhillon, who also faces criminal charges related to the scheme.
The company is not named in any SEC documents, as the B.C. Securities Commission regulates it. Its subsidiary (and controlling entity) was co-founded by Dhillon's nephew Maheep Dhillon and his cousin Yadvinder Kallu, who was sentenced to nine years in a New York federal prison in 1999 after being caught running drugs and cash in Los Angeles.
The directors initially sought a consulting agreement on behalf of the subsidiary to conduct cannabis research on a Richmond property, according to documents filed in B.C. Supreme Court.
That same property, owned by Kallu family members, would be raided by RCMP and Delta police in October 2020.
Police found 11,152 cannabis plants, plus illicit equipment, surveillance cameras, workers and a currency counting machine. In total, police say the operation was worth $18 million annually and was linked back to organized crime, specifically the Hells Angels and the UN Gang.
Delta Police have yet to lay charges from the investigation and multiple property raids dubbed "Operation Rolling Thunder" and "Project Big Smoke."
The U.S. Department of Justice has not been able to locate and serve Sharp. Meanwhile, Dhillon remains under house arrest in Long Beach, California.