Federal prosecutors in Arizona charged four men, including a Chino Hills resident, with conspiracy, securities fraud, wire fraud and money laundering in connection with an illegal conversion of penny stocks into a profit of hundreds of thousands of dollars.
Heriberto Cruz of Chino Hills was charged Monday after the Internal Revenue Service filed an indictment Monday.
David Loflin of Baton Rouge, Benjamin Bunker of Las Vegas and an Arizona securities broker, named in the indictment as “J.K.”, were also charged.
Prosecutors said Mr. Cruz, Mr. Loflin and Mr. Bunker turned a debt belonging to Greenway Design Group Inc. into nearly two billion shares of unrestricted stock.
Delaware-based Greenway had “worthless stock, no assets, a negative bank balance and all business activity had ceased,” according to the indictment said.
The man identified as J.K. purchased a controlling interest in the company through a shell business connected to Mr. Cruz and hid his identity, according to the indictment.
Using a “pump and dump” scheme, the pair touted the stock with press releases that Mr. Loflin wrote and sold the shares for an inflated profit.
That took place from October 2014 and May 2017, prosecutors said.