February 28, 2014
On February 27, 2014, federal charges were filed in Boston in connection with an alleged microcap stock kickback scheme. The seven defendants are:
1. Shmuel Shneibalg, 43, formerly Brooklyn, NY, President and Chief Operating Officer of Safetek International, Inc
2. Gerard Haryman, 70, Lake Worth, FL, consultant for and investor in A Clean Slate Inc.
3. Ronald Lawrence Schuman, 58, of Palm City, FL, President and Chief Executive Officer of Connectyx Technologies Corp.
4. Barry Hawk, 45, of Woodmere, NY, President and Chief Executive Officer of Arctic Enterprises Inc. and Strategic Rare Earth Metals Inc.
5. Hadi Aboukhater, 42, of Haymarket, VA, funding finder for public companies
6. Sandip Shah, 40, of Chino, CA, stock promoter
7. Shailesh Shah, 47, of Chino, CA, President and Chief Executive Officer of SOHM Inc. and Costas, Inc.
Defendants Shneibalg, Haryman, and Shailesh Shah are charged with mail fraud and wire fraud. Defendant Schuman is charged with conspiracy to commit wire fraud. Defendant Hawk, Aboukhater, Sandip Shah are charged with wire fraud. If convicted, the defendants each face up to 20 years in prison, to be followed by three years of supervised release and a $250,000 fine on each count.
Note: A Criminal Complaint and/or Indictment merely contain allegations and defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Federal prosecutors allege that the defendants engaged in various schemes in which secret kickbacks were paid to an investment fund representative in order to induce the fund to buy stock in certain companies. Prosecutors allege that the kickbacks were concealed through so-called sham consulting agreements.
As it turns out, the purported investment fund representative was actually an undercover government agent.
BrokeAndBroker Blog has obtained a copy of the Indictment in USA v. Shneibalg (DMA, 14-CR-10056, February 27, 2014), which starts off with something of a bang:
1. Defendant SHMUEL SHNEIBALG ("SHNEIBALG") resided in New York. SHNEIBALG was the President and Chief Executive Officer of Safetek International, Inc., a company that purportedly sought to produce and market a product designed to relieve hemorrhoid irritation.
Soon to be inflaming Defendant Shneibalg's irritation was an undercover FBI agent known only as "UA" and a mysterious individual "H.A.," the latter is described as being "in the business of assisting public companies in finding sources of funding. H.A. is an individual known to the Grand Jury."
SIDE BAR Sitz Bath: How come the FBI guy doesn't get periods after the U and the A but the funding source guy does? The special preparation of the H and A is interesting; however, don't get all hot and itchy thinking about this.
According to the Indictment, H.A. arranged for Shneibalg to meet with UA, who would supposedly have his investment fund (apparently another clever fabrication by the Feds) undertake investments into Safetek. At an April 14th meeting, UA and Shneibalg allegedly arranged to have Safetek International, Inc. execute a consulting agreement with a nominee company that UA controlled, even though it was understood between the two that no such consulting services would be provided. Similarly, the Indictment alleges that it was also understood that the consulting agreement was merely intended to disguise the kickbacks, which took the form of 50% percent of the monies that the investment fund had invested in Safetek to H.A.