Daniel Patrick McKelvey of Foster City, California pleaded guilty to conspiracy to commit securities fraud, a charge filed by the US Attorney's Office in collaboration with the FBI and SEC, and in connection with a fraudulent penny stock scheme in which McKelvey and co-defendent Jeffrey L. Lamson, formerly of El Dorado Hills, CA, allegedly created a series of shell companies in order to fraudulently and secretly sell over-the-counter penny stocks.
The Department of Justice report states that McKelvey, Lamson, and others created a series of corporate documents for the shell companies, such as board meeting minutes, stock certificates, and shareholder lists, all of which were fake and fraudulent, and submitted this false information to the SEC and FINRA, and, in doing so, misrepresented the intent and purpose of the shell company itself, which often would sell in the form of a reverse merger.
The findings indicate that once a buyer purchased the company, secretly controlled unrestricted shares would be transferred to a third party or other account, undisclosed to the SEC, and would place the buyer in a position to "immediately engage in stock swindles or other manipulation schemes."
DOJ also wrote that McKelvey and his co-conspirators would also solicit broker-dealers to submit information to FINRA so that the company's shares could be publicly traded and entered into over-the-counter (OTC) markets. Investigators determined these submissions to FINRA, like their SEC counterparts, were false and concealed the roles of the conspirators.
McKelvey's BrokerCheck report indicates previous registration with Internet Securities in Oakland, California and a pending civil case from 2015, in which the SEC implicated McKelvey in a fraudulent scheme to offer and sell penny stocks in undisclosed "blank check" and shell companies while misrepresenting to the public that they were promising startups with business plans when they were not.
The SEC proceeding stated that the corresponding pump-and-dump scheme generated approximately $6 million in ill-gotten gains before the SEC ordered the group to stop its activities, noting that McKelvey, Lamson, Edward G. Sanders (Coral Springs, Florida) and Scott F. Hughes (Duluth, Georgia) all played a role in furthering the false scheme and violated or aided and abetted violations of the antifraud, record keeping, reporting, and/or control statutes of federal securities laws.
The SEC report named Forte Capital Partners, LLC—a company managed by McKelvey—as one of four relief defendants for the purpose of recovering illicit proceeds. The other companies named were AU Consulting LLC and MBN Consulting LLC.
If you have invested with Foster City's Daniel Patrick McKelvey, or with any broker or financial adviser whose fraudulent misrepresentation or solicitation to invest in sham shell companies or whose manipulative pump-and-dump scheme involving "secret" OTC penny stocks has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.
Release: Two Stock Promoters Charged with Securities Fraud in Connection with Scheme to Fraudulently Register Shell Companies and Secretly Sell Stock (US Attorney's Office/Southern District of Florida)