Two stock promoters, trader and lawyer sentenced in scheme

Michael P. Tremoglie May 14, 2012, 12:50pm

WASHINGTON (Legal Newsline) -- The U.S. Department of Justice says two stock promoters, a securities lawyer and a stock trader associated with a Costa Rican brokerage firm have been sentenced for a stock manipulation scheme that defrauded people who invested in a company called CO2 Technologies of about $7 million.

A federal judge sentenced Michael Krome, 50, a securities attorney from New York, to 34 months in prison. Stock promoters Timothy Barham Jr., 44, of Tennessee, and Robert Weidenbaum, 46, of Miami, were sentenced to 30 months and 26 months in prison, respectively. Krome, Barham and Weidenbaum previously pleaded guilty to conspiring to commit securities fraud, mail fraud and wire fraud. Krome will forfeit $17,490; Barham will forfeit $250,000; and Weidenbaum will forfeit $360,000.

Weidenbaum and Barham admitted that they and others increased the market price and demand for the stock through by fraudulent press releases. They also admitted to engaged in deceptive trades of shares of CO2 Tech stock to create an impression of demand for the stock.

"Weidenbaum and Barham also admitted that they and other conspirators were paid approximately $1 million in cash to buy CO2 Tech stock in order to inflate its price," the DOJ said. "The cash was delivered to them in Miami via a private jet from an airport outside New York. The stock manipulation scheme generated approximately $7 million in illegal proceeds."

The plan was orchestrated by two Israeli nationals,according to the DOJ. The two men, Eric "Ariav" Weinbaum and Izahack Zigdon, are both fugitives, Also charged was Ronny Salazar Morales, another trader at Sentry Global Securities and Red Sea Management. Salazar is also a fugitive.

More News