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Quartet of indictments from securities crimes, and money laundering

PRESS RELEASE

Four Defendants Indicted for Securities Fraud, Conducting International Pump-and-Dump Scheme, and Money Laundering 

Tuesday, November 22, 2022

For Immediate Release

U.S. Attorney’s Office, Southern District of California

Assistant U. S. Attorneys Owen Roth and Aaron P. Arnzen

NEWS RELEASE SUMMARY – November 22, 2022

SAN DIEGO – Canadian resident David Stephens and California residents Donald Danks, Jonathan Destler, and Robert Lazerus are charged in a federal grand-jury indictment with securities fraud in connection with a pump-and-dump scheme, and Danks is additionally charged with money laundering, arising from their alleged manipulation of the market for shares of Quebec-based Loop Industries, Inc.

Danks, Destler, and Lazerus are scheduled to appear in federal court on November 28, 2022.

According to the allegations in the indictment, in 2014, Stephens acquired control over a publicly-traded “shell” entity whose free-trading shares were held in various offshore nominee entities, and in 2015 worked with Danks and Destler to conduct a reverse-merger of the shell with Loop, thereby generating publicly tradable Loop shares. Without disclosing his controlling interest in all, or nearly all, freely tradeable Loop shares, Stephens directed sales of shares on the open market and transferred large blocks to Danks, a Loop board member, and Destler, a controlling shareholder. In turn, Danks and Destler made material false statements and omissions about their interests in Loop, failed to disclose those interests, and directed and conducted transactions in Loop stock. Danks and Destler worked with Lazerus to promote the stock, including by having Lazerus successfully persuade an elderly investor to purchase millions of dollars of shares in 2017. Stephens, Danks, Destler and Lazerus then divided the proceeds from the sales among themselves.

The indictment further alleges that Lazerus, assisted by Danks and Destler, sought to promote Loop shares by passing material, non-public information about Loop to an investor, who was in fact an undercover agent for the FBI. Finally, the indictment alleges that Danks used more than $500,000, procured as a margin loan from Loop shares, to finance the purchase of a home in Southern California.

“Securities fraud schemes victimize investors and degrade the integrity of the securities markets,” said U.S. Attorney Randy Grossman. “This indictment reflects a commitment by this office and its agency partners to keep a vigilant watch for market manipulation and hold those who violate our securities laws accountable.” Grossman thanked the prosecution team, the FBI, and the Securities and Exchange Commission for their excellent work on the case.

“Today’s indictment sends a strong message that the FBI will aggressively pursue anyone who thinks they can get away with defrauding innocent investors for their personal gain,” said Stacey Moy, Special Agent in Charge of the FBI San Diego Field Office. “The FBI is committed to investigating allegations of significant financial crime and market manipulation, and in doing so, will work to restore public trust in a fair market.”

The Securities and Exchange Commission has also taken civil action against the named defendants.

DEFENDANTS                                             Case Number 22cr2701-BAS                            

David Stephens                                               Age: 66                                   Alberta, Canada

Donald Danks                                                 Age: 65                                   Newport Beach, CA

Jonathan Destler                                             Age: 59                                   Los Angeles, CA

Robert Lazerus                                                Age: 66                                   Solana Beach, CA

SUMMARY OF CHARGES

Conspiracy – Title 18, U.S.C., Sec. 371

Securities Fraud –Title 18, U.S.C. Secs. 78(b), 78ff & Title 17, C.F.R. Sec. 240.10b-5

Money Laundering – Title 18 U.S.C., Sec. 1956(a)(1)(B)(i)

Maximum penalty: Twenty years in prison and a fine of not more than the greater of twice the amount of gain or loss associated with the offense or $250,000.

AGENCIES

Federal Bureau of Investigation

United States Securities and Exchange Commission Boston Regional Office

*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.

Updated November 22, 2022

U.S. Department of Justice Press Release

Link:

DOJ Press Release

Categories: Anti-Money Laundering Department of Justice (DOJ) Updates Enforcement Actions Fraud Indictments and Arrests Pump and Dump Scheme Securities Fraud

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