Date: 07-02-2024

Case Style:

United States of America v. Colin Heatherington

Case Number: 2:13-cr-00183

Judge: John A. Kronstadt

Court: The United States District Court for the Central District of California (Los Angeles County)

Plaintiff's Attorney: The United States Attorney’s Office in Los Angeles

Defendant's Attorney:

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Description:

Los Angeles, California criminal defense lawyer represented the Defendant charged with Role in Penny Stock Scheme
Canadian Man Sentenced to 3½ Years in Prison for Role in Penny Stock Scheme that Caused More Than $215 Million in Losses

A former trader for a group of hedge funds was sentenced today to 42 months in federal prison for participating in a scheme that manipulated penny stock prices to inflate the hedge fund’s reported profits – fraudulent gains that generated millions of dollars in management and performance fees – and caused investors to lose more than $215 million when the funds collapsed.

Colin Heatherington, 49, of Vancouver, Canada, was sentenced by United States District Judge John A. Kronstadt, who also ordered him to pay $215,815,031 in restitution – jointly and severally with co-defendant Todd Michael Ficeto, 57, a former Beverly Hills stockbroker who also was convicted in this case following a jury trial.

Heatherington pleaded guilty on February 1 to one count of conspiracy to commit securities fraud and wire fraud. He has admitted his role in the scheme run out of Absolute Capital Management Holdings (Absolute Funds), a Cayman Island-based company that managed eight hedge funds from offices in Mallorca, Spain.

Heatherington was a securities trader who worked closely with the founder and chief investment officer of Absolute Funds, Florian Wilhelm Jürgen Homm, 64, a German financier who was indicted in March 2013 and is currently a fugitive from justice.

As part of the scheme, which lasted from 2004 to June 2008, Heatherington oversaw the purchase of billions of shares of United States-based penny stocks, which were then traded using various manipulative practices, such as cross trading, which fraudulently inflated the value of the stocks and, in turn, the value of the Absolute Funds.

Heatherington and others in the scheme also reaped millions in profits through self-dealing trades in which they sold their own shares of artificially inflated penny stocks to the Absolute Funds.

After this case was indicted, Heatherington was in Canada, and the United States sought his extradition. After fighting extradition, Heatherington agreed in 2021 to come to the United States.

Ficeto was sentenced to six years in federal prison after being found guilty by a jury in July 2019 of 18 felonies relating to his managerial role in the scheme to manipulate penny stock prices, which garnered him many millions of dollars from fees and commissions and self-dealing trades. Ficeto also allowed Heatherington and other members of the conspiracy to trade the manipulated penny stocks through his company, among other fraudulent acts.

The FBI investigated this matter. The Department of Justice’s Criminal Division’s Office of International Affairs, IRS Criminal Investigation, the United States Securities and Exchange Commission, and the Financial Industry Regulatory Authority (FINRA) provided assistance.

Assistant United States Attorneys Cassie D. Palmer of the Public Corruption and Civil Rights Section, Scott Paetty of the Major Frauds Section, and Ian V. Yanniello of the General Crimes Section prosecuted this case.

Outcome:

Defendant was found guilty and sentenced to 42 months in federal prison

Plaintiff's Experts:

Defendant's Experts:

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