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by Mike Caswell

The U.S. Securities and Exchange Commission has filed civil fraud charges against several residents of Vancouver and Calgary for a scheme to boost stocks by hacking brokerage accounts. The SEC claims that the group built up large positions in companies and then forced U.S. brokerage accounts to buy stock in those companies. They unloaded their stock in the midst of the hacking, realizing a combined $1.3-million, the SEC says. (All figures are in U.S. dollars.)

The allegations are contained in a civil complaint that the SEC filed on Monday, Aug. 15, in federal court in Atlanta. The defendants include Rahim Mohamed, 45, a Calgary man who controls a brokerage in the Cayman Islands called White Sands Securities SEZC. Also named is Zoltan Nagy, 55, of Vancouver; Phillip Sewell, 61, of Vancouver; Richard Tang, 44, of Richmond; Anna Tang, 43, of Richmond; Breanne Wong, 33, of Vancouver; and Davies Wong, 62, of Vancouver.

The charges arise from a scheme to sell shares of two companies, including Lotus Bio-Technology Development Corp., a supposed cannabis company trading on the OTC Markets. According to the SEC, members of the group laid the groundwork for the scheme in 2015, with Mr. Tang and Mr. Nagy using backdated paperwork to obtain blocks of tradable shares. Mr. Tang structured his holdings so that no single entity held enough shares to trigger any reporting requirements, the SEC says. Eventually the group's holdings amounted to 63 per cent of the company's outstanding shares.

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