BURST
Quebec’s investment markets regulator has found that four British Columbians committed an international pump-and-dump stock fraud and fined them $3.5 million.
West Vancouver-businessman Frederick Langford Sharp, the accused mastermind behind a separate US$1 billion pump-and-dump scheme, was fined $2 million.
Pasquale Antonio Rocca of Vancouver was fined $630,000, Shawn Van Damme of Maple Ridge was fined $500,000, and Vincenzo Antonio Carnovale of West Vancouver was fined $300,000.
All four were banned from carrying out any activity related to securities transactions in Quebec’s markets, and prohibited for five years from acting as an administrator or officer of an issuer, broker, adviser or investment fund manager in Quebec.
The sanctions come more than two years after the Quebec securities commission, the Autorité des marchés financiers, and Quebec’s Financial Market Administrative Tribunal successfully defended its jurisdiction to prosecute financial fraudsters who live outside of Quebec.
That six-year fight ended when the Supreme Court of Canada found, in a 7-1 decision, that Quebec’s tribunal and the province’s securities commission have jurisdiction when there is a “sufficient connection” or a “real and substantial connection” between the province and the defendant.
The high court highlighted that because contemporary securities manipulation and fraud are often transnational and extend across provincial and national borders , courts and tribunals must take a flexible and purposive approach when applying the principles of order and fairness in the securities context.
Unlike in the U.S. or the U.K., Canada doesn’t have a national securities regulator, Instead, each province has it own securities commission.
In its decision released Wednesday, the Quebec financial market tribunal found that Sharp and the three others British Columbians hid the ownership of shares in mining company Solo, fraudulently inflated the price of the shares with promotions and netted $2.6 million in profits when the shares were dumped on unsuspecting investors.
Shell companies in places such as the Marshall Islands, Belize and the Antilles were used, as well as banks in Switzerland and the U.K. during 2011 and 2012.
The tribunal found Quebec’s securities commission had presented sufficient evidence to establish the four British Columbians involvement in implementing the scheme.
“This evidence notably demonstrated that they were the beneficial owners of the accounts used to acquire and trade Solo shares and to finance the company’s operations,” said the tribunal.
Sharp has faced other sanctions in Canada and the U.S. for stock fraud.
In 2023, the B.C. Securities Commission permanently banned Sharp from the province’s investment markets.
In 2022, a U.S. Federal Court issued a default judgment against Sharp for fraud and market manipulation after he didn’t defend himself against allegations that he masterminded a long-running “complex” scheme to facilitate penny stock fraud in hundreds of companies with gross sales of more than US$1 billion.
In penny stock frauds, the price of low-value stocks are artificially inflated by owners, who hide their identities, and then sold for a profit at the expense of buyers.
The U.S. district court for Massachusetts issued penalties against Sharp and an order to pay back illicit profits, with interest, totalling US$53 million.
The SEC has gone after Sharp in B.C. to collect those penalties, receiving approval in a B.C. Supreme Court ruling that nearly US$29 million of those penalties are enforceable in B.C.
A B.C. court order freezing assets was issued in 2024.
Sharp also faces criminal prosecution in the U.S. for the alleged US$1-billion pump and dump scheme.
While Sharp didn’t defend himself against the civil case brought by the U.S. Securities and Exchange Commission, in his fight in B.C. Supreme Court to oppose collection of the US$29 million penalty in the province, he denied all of the SEC’s claims. Sharp argues he was denied “procedural fairness,” not properly served notice of the U.S. court proceedings, and that the U.S. court action has no jurisdiction over him.
Carnovale is also named in a U.S. Securities and Exchange Commission prosecution in U.S. courts for a separate pump-and-dump scheme that was allegedly assisted by Sharp, part of the larger alleged US$1-billion stock fraud plan.