Vancouver businessman David Sidoo, who spent three months in a United States federal prison in 2020 after pleading guilty to wire and mail fraud conspiracy charges, once again finds himself in legal jeopardy.
On Thursday, the US Securities and Exchange Commission filed a complaint in federal court in the Southern District of New York alleging Sidoo and seven co-defendants conspired to defraud investors out of US$145 million.
“The defendants engaged in the multi-year pump and dump penny stock fraud scheme,” the filing says.
According to the FBI and the District Attorney for the Southern District of New York, four of Sidoo’s co-defendants in the SEC filing have also been criminally indicted, with two of those men already arrested.
In a news release, the US Department of Justice said there are 10 criminal defendants in three unsealed indictments and they include residents of Canada, the United Kingdom, Bulgaria, Spain, Monaco, Turkey and the Bahamas.
“These pernicious ‘pump-and-dump’ schemes made the defendants rich while causing real harm to ordinary, retail investors who were left swallowing the losses,” US Attorney Damian Williams said in the statement.
The charges against each individual in the group include conspiracy to commit securities fraud, conspiracy to commit wire fraud, multiple counts of securities fraud, wire fraud and money laundering.
Many of those charges carry maximum sentences of 20 years in prison per count.
Sidoo’s name does not appear in the indictments but Ronald Bauer, Daniel Ferris, Craig Auringer and Peter Mihaylov’s names appear in both the criminal and SEC court filings.
Nobody answered the intercom at Sidoo’s West Point Gray home on Friday – but CTV News did speak with him at a community event in February – asking specifically about certain companies and whether it was true investors lost millions while he got rich.
“You know, we are in venture capital. We do start up companies,” Sidoo said. “I think there’s a misconception of some of the facts there that you have.”
The court documents accuse Sidoo and his co-defendants of using off-shore shell corporations to conceal their ownership interests in a number of different companies while spending millions of dollars to promote stock in those companies.
The filing alleges they encouraged investors to buy stock at a time when the defendants themselves “did not believe the statements, as evidenced by their simultaneous, and massive, trading in the opposite direction as they collectively sold their stock during the campaign.”
SEC investigators allege Sidoo was well-aware of his responsibilities and obligations to potential investors.
“For his part, Sidoo had worked for eight years as a stockbroker (and, as such, had significant exposure to, and therefore awareness of, the federal securities laws’ antifraud, registration, beneficial ownership reporting and insider transaction reporting provisions),” the document said.
Sidoo’s criminal record in the United States is related to his role in the US college admissions scandal that saw several wealthy and high-profile parents go to prison for getting their children into prestigious post-secondary institutions through fraud and bribery.
Sidoo admitted paying a Havard University graduate $200,000 to write entrance exams for his two sons — who would go on to attend UC-Berkeley and the University of Southern California, respectively.
When CTV News was given the opportunity to interview Sidoo at the community event in February, the offer was framed as a chance to speak to Sidoo about the philanthropy he had already undertaken and planned to undertake – as well as past mistakes.
“The only thing I can say is people make mistakes. We all take turns making them. Some are big and some are small. You move on from it,” he said.
But shortly after the conversation turned to questions about his business practices Sidoo abruptly ended the interview and walked out of the building.
None of the allegations in the latest complaint have been proven in court, but if they are deemed to be true, the defendants could face financial penalties along with being barred from holding certain positions in publicly traded companies and trading certain types of stocks.
Those criminally charged could be facing lengthy prison terms.
The unsealed criminal indictment against Sidoo’s four co-accused in the SEC filing lists three people as co-conspirators not named as defendants.
One of those people is identified only as “CC-3” and identifying information indicates this person is a citizen of Canada who allegedly “participated in the stock manipulation schemes by, among other things, co-ordinating promotional campaigns that, at times, caused materially false and misleading information to be distributed to the investing public for the purpose of inflating the share price and trading volume of an issuer’s shares.”
The SEC filing accuses Sidoo of co-ordinating a promotional campaign to promote urging investors to buy stock in a company called American Helium.
“Sidoo also had, and exercised, authority over the American Helium promotional and creative content. And Sidoo also contemporaneously reviewed reports from NYC Media Company A reflecting the impact of American Helium promotional activity on its share price and trading volume,” the SEC document says.
It is not clear if the District Attorney’s office in the Southern District of New York has more indictments to unseal at a later date, if Sidoo is personally under criminal investigation for the alleged multi-million dollar fraud, or if he is one of the unnamed co-conspirators who co-operated with investigators.