An Ontario woman who operated two companies linked to a massive penny stock fraud scheme says she feels terrible about what happened, calling the loss of investors’ money “horrifying.”
But Andrea McCarthy says she didn’t think anything was unusual when she was asked to move large sums of money from the companies for her boyfriend, Sandy Winick, who is facing criminal charges in the U.S. related to a fraud scheme.
McCarthy told a sanctions hearing at the Ontario Securities Commission on Wednesday that people were always asking Winick for money and she made the transfers and payments as a favour to him.
The OSC ruled earlier this year that McCarthy, who acted as a director and officer for BFM Industries Inc. and Liquid Gold International Inc., was a knowing participant in the scheme, and “illegally distributed” securities and trades without registering with the OSC.
The regulator is asking for $102,000 in penalties, alleging that from November 2008 to December 2010, McCarthy’s companies defrauded 32 foreign investors by selling them $445,000 of worthless stock.
The commission says it was McCarthy who was responsible for handling the day-to-day operations at the two companies, including communicating with investors and withdrawing money from corporate accounts.
The OSC has already banned Winick and his business partner, Gregory Curry, from securities trading and ordered them to pay more than $1 million in penalties for breaking securities law.
Those sanctions were related to separate schemes involving securities of BFM, Liquid Gold and a third company called Nanotech Industries Inc.
Winick and Curry are accused by the U.S. Attorney’s office of being the leading figures in fraud schemes involving US$140 million and spanning dozens of countries, including Canada.
The two men were arrested in Thailand last summer after a multi-year investigation involving the FBI and the RCMP that also relied on wiretaps in the U.S. and undercover agents abroad.
It is believed there are tens of thousands of victims.
The U.S. indictment alleges that the defendants were involved in a massive “pump and dump” scheme, or buying controlling interests in sketchy startup companies, then artificially inflating their value by promoting them in fictitious emails, social media messages and news releases.
American authorities have also ordered Winick to pay back roughly $3.2 million in “ill-gotten gains” obtained through what they call an “illicit trading scheme” involving another penny stock issuer.