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by Mike Caswell

A California judge has refused to throw out criminal charges against three U.S. men for the pump-and-dump of Loop Industries Inc., a Quebec company that claimed to have a deal with Coca-Cola. Prosecutors claimed that the men boosted Loop by convincing an elderly, vulnerable investor to make purchases on the market. For their part, the men claimed that there was insufficient evidence of fraud, but the judge has ruled otherwise.

The loss comes as part of a case in which California prosecutors cited four men, including Vancouver's David Stephens, for a scheme to manipulate Loop. The men unloaded the stock as it went to an $18 high, realizing $3.2-million in gains, the government said. (All figures are in U.S. dollars.) Prosecutors claimed that the case amounted to a pump-and-dump, with the stock price supported by a "concerted effort" to have the elderly investor buy shares.

The case has yet to go to trial, with Mr. Stephens's three co-defendants seeking to have the charges dismissed. Those co-defendants, all from California, were arrested at the outset of the case and pleaded not guilty. They are Donald Danks, Jonathan Destler and Robert Lazerus. (U.S. authorities have yet to take Mr. Stephens into custody.) Among other things, the men complained that prosecutors failed to accuse them of the standard things that go along with a pump-and-dump. The government did not identify any misleading news releases, on-line postings or other statements that may have artificially boosted the stock, they complained. They also said that there was no evidence of fraud. As they saw things, the appropriate remedy was for the judge to dismiss the matter entirely.

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