A Swiss asset manager that allegedly made millions through market manipulation schemes has been charged in the U.S.
Blacklight SA and its founders engaged in several pump-and-dump schemes involving U.S. micro-cap stocks over the course of six years, among other market manipulation tactics, the Securities and Exchange Commission and the Department of Justice alleged in parallel charges announced Thursday evening. Blacklight’s founder and principal owner, Kenneth Ciapala, was arrested in the United Kingdom, and the U.S. government is seeking his extradition, according to the Justice Department’s announcement.
Blacklight, which is based in Geneva, Switzerland, purported to be an asset management firm but instead manipulated over-the-counter stocks to artificially raise prices before selling them, according to the complaint and indictment. Blacklight also allegedly facilitated the sale of unregistered securities, according to the documents.
“As we allege in the complaints, the defendants evaded the securities registration requirements and engaged in other manipulative conduct, including by disguising the true sellers of securities, to defraud investors and generate illicit profits for themselves,” said Marc Berger, director of the SEC’s New York regional office, in a statement.
The SEC is charging Ciapala, Blacklight, and Blacklight co-founder Anthony Killarney with allegedly violating the antifraud and registration provisions of the federal securities laws and with acting as unregistered broker-dealers. The SEC is seeking permanent injunctions, a payout of the “allegedly ill-gotten gains plus interest,” penalties, and to bar the two from trading penny stocks, its announcement said.
The SEC also charged Steve Bajic and Rajesh Taneja, both of whom ran a series of foreign companies, with allegedly assisting Ciapala with the pump-and-dump schemes. The SEC’s complaint also alleges that Christopher McKnight and Aaron Wise fraudulently transferred and hid the sources of funds that were used to artificially increase share prices as a part of the schemes.
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Meanwhile, the Justice Department is charging Ciapala and Blacklight with one count of conspiracy to commit securities fraud, three counts of securities fraud, one count of conspiracy to commit wire fraud, wire fraud, conspiracy to commit money laundering, and money laundering. The maximum prison sentence for many of those charges is 20 years, according to the Justice Department.
“As a result of the stock manipulation scheme, the scheme’s participants reaped millions of dollars in illicit profits by selling the shares they beneficially owned and controlled into the market at artificially inflated prices,” according to the Justice Department’s announcement.
Additionally, Ulrik Debo, who worked with a Cayman Islands-based financial services firm, was arrested alongside Ciapala in the United Kingdom and charged by the Justice Department for allegedly identifying the companies used in the pump and dump scheme, its announcement stated. None of the individuals charged by the SEC or Justice Department could be reached for comment.
