February 27, 2017 / 10:20 PM / 3 years ago

Trader who touted ForceField on Fox Business pleads guilty to conspiracy

NEW YORK, Feb 27 (Reuters) - A trader who touted the stock of ForceField Energy Inc on television while being paid kickbacks to endorse the LED lighting provider pleaded guilty on Monday to a conspiracy charge, related to a fraud that cost investors $131 million, federal prosecutors said.

Herschel Knippa, the owner and head trader at Kenai Capital Management LLC in Dallas, admitted to conspiring to commit securities fraud, in a hearing before U.S. Magistrate Judge Ramon Reyes in Brooklyn.

Prosecutors accused Knippa, 46, of touting the now-essentially worthless ForceField stock on television without revealing his receipt of kickbacks.

They also said that during a July 2014 appearance on Fox Business Network’s “Varney & Co,” Knippa lied to host Stuart Varney when asked if he owned ForceField by responding: “You bet I do. I put my money where my mouth is.”

According to court papers, Knippa solicited more than $1.19 million in ForceField private placements from at least 10 investors, and with other conspirators tried to hide the scheme by using disposable cellphones and using cash for kickbacks.

“Mr. Knippa has accepted responsibility for violating the securities law,” his lawyer Alex Spiro said in an email.

The defendant faces up to five years in prison. Fox Business and Varney were not accused of wrongdoing.

Knippa was one of nine defendants, including stock promoters, brokers and investor relations officials, accused last May of defrauding investors into buying ForceField.

That followed the April 2015 arrest of Richard St. Julien, a Canadian citizen who was ForceField’s executive chairman, on charges he schemed to inflate the stock price of his company, once called SunSi Energies Inc.

Authorities said the defendants manipulated ForceField stock from 2009 to April 2015 by secretly trading it in undisclosed accounts, inflating trading volume, and concealing kickbacks.

At least seven defendants have entered guilty pleas, court records show. The case against St. Julien is pending, the records show.

ForceField shares last traded on Thursday, at 1/10,000th of a cent, Reuters data show. (Reporting by Jonathan Stempel in New York; Editing by Phil Berlowitz)

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