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Canadian involved in penny stock fraud scheme gets six-and-a-half years in U.S. prison

NEW YORK (Reuters) - A Canadian man who prosecutors said led schemes that used call centers around the world to defraud investors was sentenced on Wednesday to 6-1/2 years in prison in a case that stemmed from one of the largest penny stock investigations in U.S. history.

Sandy Winick, who prosecutors say led a scheme that sought to profit from selling billions of fraudulently-inflated shares to unsuspecting investors, was sentenced by U.S. District Judge Eric Vitaliano in Brooklyn.

Winick, who pleaded guilty last year to conspiring to commit wire fraud during a related scheme, was also ordered to pay $2.43 million in restitution and forfeit $5 million, according to the office of Brooklyn U.S. Attorney Robert Capers.

A lawyer for Winick did not immediately respond to requests for comment.

Winick, 58, was arrested in Thailand by country officials who were working with the U.S. Federal Bureau of Investigation in August 2013 on charges that he masterminded fraudulent schemes that victimized investors in about 35 countries and generated more than $140 million. He was later extradited to the United States.

Prosecutors said from 2008 to 2013, Winick and others sought to fraudulently inflate the share prices and trading volumes of several penny stocks in a pump-and-dump scheme using email blasts, chat rooms and websites containing false information.

Winick, a Canadian citizen who lived in Thailand and other places at the time, was the apex of the organization, which generated profits by selling off stocks after their prices had been inflated, prosecutors said.

Winick’s plea in July 2015 was to a single count linked to a related scheme to fraudulently solicit penny stock investors into paying fees that would allow them to sell their nearly worthless stocks at a profit.

Prosecutors said Winick was responsible for at least $5 million in losses to investors in the advanced fee scheme, which involved inventing fake businesses to trick investors to pay fees before selling the stocks.

The case followed one of the largest global penny stock probes ever by the FBI, drawing in authorities from Canada, England, Thailand and China.

All told, nine defendants were charged for their roles in the schemes. Six others pleaded guilty, while two, Gary Kershner, an Arizona business owner, and Songkram Sahachaisere, a California stock promoter, were convicted at trial in November.

The case is U.S. v. Winick et al, U.S. District Court, Eastern District of New York, No. 13-cr-00452.

Reporting by Nate Raymond in New York; Editing by Diane Craft