Monday, May 19, 2008

Turns out you really can't trust spammers

Turns out you really can't trust spammers.

By Carol S. Remond
A Dow Jones Newswires Column

A recently unsealed court document shows that convicted spammer Jeremy Jaynes has for almost two years been key in helping federal prosecutors make their case against several alleged co-conspirators in a multimillion-dollar securities fraud and money-laundering scheme.

Jaynes, a prolific Internet spammer, was charged in 2003 under a Virginia state law banning the bulk distribution of junk email. He was convicted in the state court and sentenced to nine years in prison.

Federal court documents unsealed earlier this month show that Jaynes, who has been under house arrest while appealing his spamming conviction, pleaded to one count of securities fraud in November 2006 and has been cooperating with the government since then.

Under his plea agreement, Jaynes faces a maximum sentence of 20 years imprisonment in the federal case. Documents filed in the U.S. District Court for the Western District of North Carolina, Statesville Division, show that Jaynes is scheduled to be sentenced on May 6.

Jaynes was featured in several Dow Jones Newswires "In the Money" columns for his participation in the illegal promotion of penny stocks, including Absolute Health and Fitness Inc. (AHFI) and Concorde America Inc. (CCND).

Criminal prosecutors in North Carolina have already nabbed several of Jaynes' co-conspirators, including former U.S. attorney Sam Currin. Currin, a former protege of Republican U.S. Sen. Jesse Helms, was once North Carolina's senior federal prosecutor and a former North Carolina Superior Court judge. He pleaded guilty to money laundering and obstruction charges and was sentenced to spend more than five and a half years behind bars.

The complaint filed against Currin and others followed in the footsteps of civil cases filed against promoters and entities associated with the companies by the Securities and Exchange Commission in the U.S. District Court for the Southern District of Florida in 2004.

Most recently, David Hagen, former chief officer of GTX Global, was arrested in New York after returning to the U.S. from the Bahamas where he had fled. Hagen is accused of selling stock at inflated prices and laundering his profits through bank accounts in the Bahamas, the Netherlands, Cyprus and the U.S.

Court documents show that an unnamed cooperating witness helped the government convince Hagen to return to the U.S.

The bill of information detailing Jaynes' involvement shows that from 2003 to 2006, he conspired with others, including Hagen, to manipulate the stock prices of publicly traded companies. The manipulation included the use of Internet search engine advertising, spam emails, Web sites, unsolicited faxes and voice-mail broadcasts to fraudulently tout stocks.

Besides Currin and Howell and Vernice Wolz, two accomplices in the money-laundering scheme already under arrest, the bill of information filed in Jaynes' criminal case points to several other targets of federal prosecutors.

"Mr. O," an unindicted co-conspirator from Kalamazoo, Mich., is Donald Oehmke. "Mr. K," an unindicted co-conspirator residing in Montreal, is Bryan Kos.

In the original case, which led to ongoing criminal prosecution, Kos and Oehmke were accused by the SEC of having pumped the stocks of Concorde America and Absolute Health and Fitness. The two stock promoters, without denying or admitting the charges, settled with the SEC and agreed not to violate securities laws.

Also mentioned in the complaint against Jaynes is "Mr. R," likely to be Jere Ross, a Florida lawyer who facilitated some of the money transfers outside the country. Finally, "Mr. H," likely refers to Hagen.

(Carol S. Remond is an award-winning columnist who won a Gerald Loeb Award in 2005 for best news service content with "Exposing Small-Cap Fraud," a series of articles that described how three small companies unscrupulously pumped up their stocks.)

-By Carol S. Remond, Dow Jones Newswires; 303-997-5783; [ 04-22-08 1454ET ]