A federal grand jury in Salt Lake City has returned an indictment against three men who allegedly swindled over 600 “investors†out of some $6.6 million in connection with the sale of stock in a company that was supposed to be engaged in stem cell research.
According to the nine-count indictment for wire fraud, the company known as Stem Genetics neither employed anyone with expertise in the subject nor did it do any research. Each count in the indictment has a maximum penalty of 30 years in jail.
In selling stock to mostly foreign investors from Australia, New Zealand, and the UK, Allen Z. Wolfson, 60, his son David M. Wolfson, 26, and Michael S. Newman, 45, are claimed to have simply made up stock prices and charged high commissions that were never disclosed to their victims.
In order to avoid having to register the stock with U.S. regulatory agencies, the men targeted victims outside of the country who were told that the stock would be debuting on the NASDAQ at $7, a price that would immediately net investors a 20% profit.
According to the U.S. Attorney’s Office in Salt Lake City, the Securities and Exchange Commission (SEC) has only recovered less than 25% of the stolen funds (about $1.5 million).
At present, Allen Wolfson is awaiting sentence in New York for securities fraud and Newman is thought to be in Laos where he is serving a sentence for another financial crime. The whereabouts of the younger Wolfson are not known at this time, however. Â
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