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by Mike Caswell

The U.S. Securities and Exchange Commission has launched a pump-and-dump case against former Pacific International Securities Inc. broker David Ricci and six others, including recidivist securities violator Jonathan Curshen. The SEC claims that the men manipulated CO2 Tech Ltd., a pink sheets company that purportedly developed pollution control products, and that they dumped $7-million worth of stock. (All figures are in U.S. dollars.)

The scheme was run through a Costa Rican entity called Red Sea Management Ltd., which operates dozens of nominee brokerage accounts in the U.S. and Canada, according to the SEC. Although the present case is for the CO2 promotion, the regulator says that Red Sea has run multiple pump-and-dumps through a labyrinth of nominees. In 2006 and 2007, it transferred $91.5-million from a bank account at HSBC Bank in Vancouver, most of which represented proceeds from these schemes, the SEC claims.

In addition to the SEC case, Mr. Curshen and others (but not Mr. Ricci) are facing related criminal charges of conspiracy, wire fraud and mail fraud, which the Department of Justice announced on Friday. The criminal charges carry maximum sentences of between five and 20 years.

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