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by Mike Caswell

The United States Department of Justice has filed a criminal case against Victoria's Colin Heatherington over a $53-million market manipulation scheme run from Spain. (All figures are in U.S. dollars.) Prosecutors claim that he and others used hedge funds they controlled to artificially boost a number of OTC Bulletin Board and pink sheets listings. They then allegedly sold shares in those same companies from their own accounts, with Mr. Heatherington making at least $11.6-million.

The charges against Mr. Heatherington are part of a criminal prosecution that began seven months ago, when police arrested one of his co-conspirators, German hedge fund manager Florian Homm. The government claimed that the men stuffed hedge funds they controlled with as much as $440-million in penny stocks that they had manipulated. Investors in those funds ultimately suffered $200-million in losses, the government said.

Details of the allegations against Mr. Heatherington, 38, are contained in a criminal complaint filed in the Central District of California on Oct. 8, 2013. The scheme, as described by prosecutors, took place between 2005 and 2007, when Mr. Heatherington was living on Majorca Island, which is in the Mediterranean Sea. He worked at Absolute Capital Management Holdings Ltd., a hedge fund manager with an office on the island. The fund, which Mr. Homm ran, purportedly had $2.1-billion in assets under management on Aug. 31, 2007.

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