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Case Number: 1:20-cr-00146
Judge: Jed S. Rakoff
Court: United States District Court for the Southern District of New York (Manhattan County)
Plaintiff's Attorney: United States Attorney’s Office in New York City
Description: New York City, New York criminal defense lawyer represented Defendant charged with participating in a “pump and dump” stock fraud scheme designed to target retail investors and manipulate trading in penny stock shares of Suburban Minerals Corporation (“SUBB”).
According to the Indictment and statements made in court:
From at least in or about 2013 through at least in or about March 2014, EARL INGARFIELD engaged in a scheme to manipulate the stock price of SUBB, a public company traded on the over-the-counter market. In or about 2013, the defendant obtained control of SUBB, installing management at the company that acted at his direction and financing SUBB’s operations. INGARFIELD also obtained convertible promissory notes issued by SUBB, which he then converted into tens of millions of SUBB shares that were nominally held by offshore shell entities. INGARFIELD used these shell entities to conceal his involvement and the fact that he owned and controlled the vast majority of the shares of SUBB.
In early 2014, at INGARFIELD’s direction, SUBB announced that it was purportedly acquiring a producing African diamond mine worth $5 billion. But in reality, no such mine existed. Between January 2014 and March 2014, SUBB issued a series of press releases making false representations regarding that purported mine acquisition and SUBB’s operations. During the same time period, INGARFIELD orchestrated a marketing campaign through which promotional materials echoing the same false claims were distributed to the investing public by email. The false and misleading press releases and email marketing campaign caused SUBB’s share price and trading volume to become artificially inflated.
While SUBB’s price was artificially inflated, INGARFIELD profited by selling millions of his secretly amassed shares, all at the expense of the investing public. Between January and March 2014, he made more than $1.4 million from the sale of SUBB shares.
On March 7, 2014, the Securities and Exchange Commission halted trading in SUBB, after which the share price dropped precipitously and never recovered.
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EARL INGARFIELD, 64, of Las Vegas, Nevada, pled guilty to one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison, and agreed to forfeiture of $1,418,473.
The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Williams praised the outstanding work of Homeland Security Investigation’s El Dorado Task Force.
The matter is being handled by the Money Laundering and Transnational Criminal Enterprises Unit. Assistant U.S. Attorneys Emily Deininger and Shiva Logarajah are in charge of the prosecution.
18:371.F CONSPIRACY TO COMMIT SECURITIES FRAUD
If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned not more than five years, or both.
If, however, the offense, the commission of which is the object of the conspiracy, is a misdemeanor only, the punishment for such conspiracy shall not exceed the maximum punishment provided for such misdemeanor.
15:78J.F MANIPULATIVE AND DECEPTIVE DEVICES (SECURITIES FRAUD)
It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange—
(1) To effect a short sale, or to use or employ any stop-loss order in connection with the purchase or sale, of any security other than a government security, in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.
(2) Paragraph (1) of this subsection shall not apply to security futures products.
(b) To use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, or any securities-based swap agreement  any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.
(1) To effect, accept, or facilitate a transaction involving the loan or borrowing of securities in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.
(2) Nothing in paragraph (1) may be construed to limit the authority of the appropriate Federal banking agency (as defined in section 1813(q) of title 12), the National Credit Union Administration, or any other Federal department or agency having a responsibility under Federal law to prescribe rules or regulations restricting transactions involving the loan or borrowing of securities in order to protect the safety and soundness of a financial institution or to protect the financial system from systemic risk.
Rules promulgated under subsection (b) that prohibit fraud, manipulation, or insider trading (but not rules imposing or specifying reporting or recordkeeping requirements, procedures, or standards as prophylactic measures against fraud, manipulation, or insider trading), and judicial precedents decided under subsection (b) and rules promulgated thereunder that prohibit fraud, manipulation, or insider trading, shall apply to security-based swap agreements to the same extent as they apply to securities. Judicial precedents decided under section 77q(a) of this title and sections 78i, 78o, 78p, 78t, and 78u–1 of this title, and judicial precedents decided under applicable rules promulgated under such sections, shall apply to security-based swap agreements to the same extent as they apply to securities.
Outcome: Defendant elected to plead guilty.