On September 18, 2014, the FBI arrested Izak Sirk De Maison (aka Izak Zirk Engelbrecht) and Stephen Joel Wilshinsky in Los Angeles, California for their criminal involvement in a penny stock scheme to defraud investors.
Wilshinsky last served under FINRA's purview as a registered broker with Tarzana-based Marquis Financial Services, Inc. in 2011, joining that firm after a five-year stint with Oppenheimer & Co. Inc in Los Angeles. Wilshinsky's BrokerCheck record indicates an extensive list of disclosure events, including multiple customer disputes, complaints and regulatory actions, including claims of misrepresentation, failure to supervise, unsuitable, excessive and unauthorized trading, and what FINRA described as "inappropriate investments and failure to follow instructions."
The FBI's news release states that De Maison, acting as a merchant banker, allegedly created a series of public "shell" companies, merging the "shell" with an emerging business in order to create a publicly traded company, and paid kickbacks to brokers, including Wilshinsky, in exchange for access to their clients' funds to purchase the resulting penny stock shares.
The FBI alleges that De Maison conspired with brokers, including Wilshinsky, so that he would be able to sell free trading shares on the open market whenever he wanted to, despite the typical low-volume trading in these stocks.
The investigation states that Wilshinsky was one of these brokers who held discretionary authority to make trades in his investor/clients' accounts and, in exchange for Wilshinsky and the other brokers' buying the risky penny stocks De Maison dumped, De Maison paid Wilshinsky and the brokers an undisclosed kickback, estimated by the FBI to be approximately 50 percent of the total sale price.
The FBI described De Maison as engaging in a fraudulent scheme in which he artificially caused the stock price in companies he controlled to rise (the "pump" of a pump-and-dump scheme) before selling off his inventory of stock, at which point the price plummeted (the dump). De Maison allegedly inflated the price point through conspiracy with others, false reporting and manipulative business activities designed to help De Maison's stock price reach maximum value before the rapid descent.
Describing De Maison and Wilshinsky as "sophisticated thieves," FBI special agent in charge Stephen D. Anthony outlined the charges: the pair are both charged with conspiracy to commit wire fraud and securities fraud, while De Maison is additionally charged with wire fraud, securities fraud, money laundering and using interstate commerce for the purpose of securities fraud.
The Bureau noted that it expects to file additional criminal charges and, working with the SEC, hopes to hold the pair's additional conspirators accountable for the multi-million-dollar fraudulent scheme.
If you have invested with Izak Sirk De Maison, Stephen J. Wilshinsky or with any other broker or financial advisor whose fraudulent abuse of discretionary trading authority in your account, failure to disclose material facts or executing a risky trading strategy not in line with stated investment objectives has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.
Press Release: Penny Stock Fraud Nets Millions (Federal Bureau of Investigation)