MIAMI (Reuters) - CO2 Tech Ltd, a publicly traded company that lured investors with claims about products and services to fight global warming, was full of nothing but hot air, the U.S. Securities and Exchange Commission said on Friday.
It said the U.S. Justice Department had filed criminal fraud charges against six men, including stock promoters and traders, involved in a so-called “pump-and-dump scheme” built around shares of the company, which was purportedly based in London but had no significant assets or operations.
Pump-and-dump is a form of stock fraud in which promoters “pump up” or artificially inflate a company’s share price, usually through false or misleading press releases or other public statements, and then “dump” the stock at a profit.
According to an SEC civil complaint, filed in U.S. District Court for the Southern District of Florida, the CO2 Tech scheme generated more than $7 million in illicit profits from sales of CO2 Tech stock, traded in the Pink Sheets, between late 2006 and April 2007.
The scheme was perpetrated through Red Sea Management Ltd, a Costa Rican asset protection and offshore investments company founded and led by Jonathan Curshen, the SEC said.
It said Curshen, a dual U.S.-UK citizen who lives in Sarasota, Florida, was free on conditional release pending his sentencing in another, unrelated, securities fraud case.
Curshen was instrumental in establishing the business plan that allowed him and his co-defendants to sell CO Tech stock at artificially inflated prices and bilk unsuspecting public investors out of millions, the SEC said.
An attorney for Curshen, 46, could not be reached for immediate comment. But the SEC said entities affiliated with Red Sea, which was founded in 1998, included Sentry Global Securities, a broker-dealer licensed by St, Kitts and Nevis, and Sentry Global Trust, Ltd, a St. Kitts-incorporated trust.
Red Sea had true global reach, as it used a web of nominee brokerage accounts to sell massive quantities of stock in a firm supposedly set up to save the world from greenhouse gas emissions, the SEC said.
It said the company had opened bank accounts for shell corporations in countries including the Republic of Seychelles, Cyprus, Panama and Tanzania as part of its fraudulent stock scheme.
Reporting by Tom Brown; Editing by Tim Dobbyn