* John Babikian said to own multiple homes, luxury cars
* SEC targeting "scourge" of microcap fraud
By Jonathan Stempel
March 13 The U.S. Securities and Exchange
Commission has sued and won an asset freeze against a Montreal
man who in 2012 became a fugitive after being charged in Canada
with tax evasion, and accused him of securities fraud known as
John Babikian, 26, was accused by the SEC of reaping an
illegal $1.9 million profit by selling shares of a thinly traded
coal mining company he touted online without revealing he had
already bought the shares, and planned to sell them after his
touts boosted their price.
According to the SEC complaint filed on Thursday in the U.S.
District Court in Manhattan, Babikian had scalped investors by
amassing America West Resources Inc shares before
touting the stock on Feb. 23, 2012 through two websites he
controlled, AwesomePennyStocks.com and PennyStocksUniverse.com.
The SEC said the touts contained America West's stock ticker
and headlines such as "Brand new pick coming March 1st!", and
caused other investors to quickly drive up the stock's price.
It said Babikian then sold nearly 1.4 million America West
shares within 90 minutes of his touts for an average $1.38 per
share, far above the 29 cents where the stock had been trading.
The SEC is "intensely focused on the scourge of microcap
fraud and is aggressively working to root out microcap
fraudsters who make their living by preying on unwitting
investors," SEC enforcement chief Andrew Ceresney said.
U.S. District Judge Paul Crotty in Manhattan issued the
freeze on Babikian's U.S. assets, including two homes in the Los
Angeles area and property in Oregon, the SEC said. The regulator
also wants to recoup his illegal gains.
Babikian cannot be located, and is believed to hold
passports from Guatemala, Lebanon and Nevis, the SEC said.
Canadian media last year described Babikian as a mysterious
playboy who built a $100 million fortune before he vanished.
Canada has also probed Babikian. Geneviève Laurier, a
spokeswoman for Revenu Québec, said that agency last year won a
judgment that let it pursue millions of dollars of back taxes
from Babikian, and freeze assets including a home in Laval,
Québec, a Bugatti Veyron, a Bentley Continental and a BMW X6.
SEC Chair Mary Jo White last year launched an agency task
force to police microcap stock fraud, which she has said often
targets less sophisticated investors.
America West sells low-sulfur coal to utilities. It is not a
defendant and was not accused of wrongdoing in Babikian's case.
The case is SEC v. Babikian, U.S. District Court, Southern
District of New York, No. 14-01740.