US authorities arrested Cayman resident Andrew McAlpine last Friday in Orlando, Florida, for alleged stock fraud, after he entered the United States on a privately chartered plane from Grand Cayman.
The 47-year-old Canadian allegedly participated in a stock fraud ring that artificially inflated the prices of two publicly traded penny stocks and then dumped the shares before the price collapsed.
Together with two Canadians and a US resident, McAlpine is facing charges of conspiracy to commit securities fraud, securities fraud and manipulative securities trading. The charges carry a maximum penalty of 20 years in prison and a US$5 million fine.
The investigation that led to these charges involved a co-conspirator who turned confidential informant and cooperated with the FBI while the scheme was ongoing.
The other defendants in the case are Ongkaruck Sripetch, 45, a resident of Gig Harbor, Washington, who used the aliases ‘King Richards’ and ‘Shelby Saint-Claire’; Canadian Michael Wexler, 74; and Canadian resident and securities attorney Ashmit Patel, 36.
An indictment unsealed on 21 Sept. alleges that the stock fraud ring carried out pump-and-dump schemes with the stock of VMS Rehab Systems, an Ottawa, Canada-based company that claimed to sell “quality of life orthopedic seat cushions for the home healthcare sector”; and of Argus Worldwide, a company headquartered in Cheyenne, Wyoming, which purportedly focussed on “digital/internet products and services, smart consumer electronic products and health industries”.
McAlpine, who works as an independent trader, according to his LinkedIn profile, is being held pending a bond hearing in the US District Court in Orlando, scheduled for 10.30am EST on Friday.
The indictment filed under seal in January this year in the Federal District Court for Southern California in San Diego alleges that, as part of the scheme, the conspirators traded the stock of VMS Rehab and Argus Worldwide between themselves to create the appearance of active trading in the securities, and entice investors to purchase the stocks at artificially inflated prices.
“These defendants sought to boost the stock price of two companies, and then leave innocent investors with investments that they knew would almost immediately lose most or all of their value,” said US Attorney Robert Brewer in a Department of Justice press release.
Suzanne Turner, special agent in charge of the FBI’s San Diego division, said McAlpine and alleged co-conspirator Sripetch were arrested by FBI agents. US prosecutors are still seeking the arrest of Patel and Wexler.
McAlpine, Sriptech, Wexler and Patel are also named, together with 12 other individual and corporate defendants, in a complaint filed by the US Securities and Exchange Commission in the same court. The SEC alleges the defendants cooperated in numerous fraudulent schemes involving at least 20 penny stock companies.
The SEC complaint describes McAlpine as a former vice president of Legacy Global Markets, S.A., a now-defunct broker-dealer in Belize.
In 2015, the SEC charged Legacy – together with Caledonian Bank and Caledonian Securities in the Cayman Islands, Belize-based Clear Water Securities and Panama-based Verdmont Capital S.A. – with offering and selling unregistered penny stocks in the public markets.
The SEC alleged that Legacy and Clear Water were the primary Caledonian clients that traded in four penny stock pump-and-dump schemes.
The charges and a related freeze-order led to the demise of Caledonian Bank.
In a default judgment in 2017, the US District Court for the Southern District of New York ordered Legacy to pay $14.9 million in disgorgement, interest and civil penalties, and imposed a permanent penny stock bar against the broker.
SEC filings state that before joining Legacy Global Markets S.A. (Cayman) in 2010, McAlpine was employed as senior financial advisor with Grand Palm (Cayman) Ltd. from 2007 to 2010.
From 1995 to 2007, McAlpine worked as a senior financial advisor for LOM Securities (Cayman) Ltd.