The U.S. Securities and Exchange Commission (SEC) has obtained a final judgment against Vancouver resident Frederick “Fred” Sharp, a former lawyer turned offshore shell facilitator deemed to be the mastermind of a massive $1 Billion stock manipulation scheme involving hundreds of penny stock companies. The appropriate U.S. District Court entered the final judgment by default on 12 May 2022 against Sharp as he failed to appear before the court. In Aug 2021, the SEC has obtained emergency relief in court, including an order to freeze the defendants’ assets.
The Case
Sharp is ordered to pay disgorgement and prejudgment interest of US$28,934,433, a civil penalty of US$23,990,781, and is barred from future trading in U.S. stocks. According to the SEC complaint, Fred Sharp masterminded a complex scheme from 2011 to 2019 in which he and his associates enabled control persons of penny stock companies, whose stock was publicly traded in the U.S. securities markets, to conceal their control and ownership of huge amounts of penny stock and then surreptitiously dump the stock into the U.S. markets, in violation of federal securities laws.
The complaint alleges that one group of control persons comprised of Canadian residents Mike K. Veldhuis, Paul Sexton, and Jackson T. Friesen frequently collaborated with Sharp to dump huge stock positions while hiding their control positions and stock promotional activities from the investing public. The complaint further alleges that California resident Avtar S. Dhillon, who chaired the boards of directors of four of the public companies whose stocks were fraudulently sold during the schemes, reaped millions in illicit proceeds from those illegal sales.
Authorities attempted to serve Fred Sharp with the charges last in August 2021 but he failed to respond to them. Thus, The SEC attorneys applied for the default judgment.
Pending Criminal Charges
These civil charges are in conjunction with criminal charges of securities fraud and conspiracy to commit securities fraud brought against Fred Sharp by the U.S. Department of Justice (link). In May 2016, Sharp became the Canadian face of the Panama Papers, the massive leak of documents of Panamanian company Mossack Fonseca that revealed a vast network of offshore companies acting as tax havens. He helped register 1,167 offshore entities from his Vancouver office, according to the documents.
