Alleged stock fraudster Andrew McAlpine has posted a bond of US$1 million to be released from custody and allowed to travel from Florida to California to make an initial court appearance in San Diego on 28 Sept.
A second, unsecured bond for US$200,000 was presented by a Stephen Walter Carnes to secure McAlpine’s release. The court ordered the Canadian to wear an electronic monitoring device and to surrender two of his three passports. However, it allowed McAlpine to keep his British passport to make the trip.
The 57-year-old Cayman resident was arrested by FBI agents on 18 Sept. when he landed in Orlando on a privately chartered plane, travelling from Grand Cayman to Canada. He is facing charges of conspiracy to commit securities fraud, securities fraud and manipulative securities trading.
A sealed criminal indictment filed in January of this year in the Federal District Court for Southern California accuses McAlpine, together with two Canadians – Michael Wexler and Ashmit Patel – and US-resident co-defendant Ongkaruck Sripetch, of participation in a stock fraud ring that artificially inflated the price of two publicly-traded penny stocks in pump-and-dump schemes.
According to the indictment, a co-conspirator who turned confidential informant and cooperated with the FBI, received 1.5 million shares in one of the stocks, Argus Worldwide, from Wexler as a gift. Wexler allegedly misrepresented in a letter, that was relied on by the brokerage, that “no repayment is expected or implied in this gift”.
The indictment states the informant deposited 800,000 shares in his brokerage account and transferred 700,000 shares to McAlpine, who deposited the shares in his offshore brokerage account in the name of Dunstaffnage Corporation with Seven Mile Securities in the Cayman Islands.
Sriptech and McAlpine then allegedly engaged in manipulative trading in the Argus stock to create the misleading appearance of active trading in the stock, while Wexler and Sriptech issued press releases about the company to generate interest and provide material for third party promotions of the stock.
The informant, Sriptech and McAlpine, subsequently sold Argus Worldwide stock from their brokerage accounts at inflated prices to the open market, the indictment states.
It is the second time a penny stock fraud case has been filed in the San Diego court that involves a Cayman resident from Canada and a Californian confidential informant.
Former Cayman Islands brokerage owner Oliver-Barret Lindsay pleaded guilty to charges related to a penny stock pump-and-dump scheme in August 2019.
His sentencing, first scheduled for November 2019, has been postponed multiple times, most recently until January 2021, and Lindsay has been allowed to await sentencing in Canada.