Doug Furth Indicted in Kickback Scheme
On December 12, 2014, the Securities and Exchange Commission (“SEC”) filed a civil injunctive action in the United States District Court for the Eastern District of New York, charging Douglas Furth, a stock promoter who resides in Solon, Ohio, with manipulating the common stock of SearchPath HCS, Inc. (“SearchPath”). On the same day Furth was indicted in connection with the same conduct.
According to the allegations from at least September to December 2010, Furth engaged in a fraudulent broker bribe scheme to manipulate the market for SearchPath shares using matched trades. The allegations include that Furth entered into a kickback arrangement with an individual (“Individual A”) who claimed to represent a group of registered representatives with trading discretion over the accounts of wealthy customers.
According to the charges, Furth promised to pay a 30% kickback to Individual A and the registered representatives he represented in exchange for the purchase of up to $10-30 million of SearchPath stock.
The government alleges that on October 13-15 and December 6-10, in accordance with the illicit arrangement, Furth instructed Individual A to purchase approximately 52 million shares of SearchPath stock for a total of approximately $80,000. Furth gave Individual A detailed instructions concerning the size, price and timing of the orders. Thereafter, Furth paid Individual A bribes of approximately $24,000 for those purchases.
The SEC complaint charges Furth with securities fraud for violating Section 17(a)(1) of the Securities Act of 1933 and Sections 9(a)(1) and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder. The SEC seeks permanent injunctive relief from Furth, disgorgement of ill-gotten gains, if any, plus pre-judgment interest, civil penalties, and a penny stock bar.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit www.securitieslawyer101.com. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute legal advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
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Brenda Hamilton, Securities Attorney
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