Ronald Bauer Sentenced To 20 Months For Pump-And-Dump Scheme
On March 20, 2025, the United States Attorney for the Southern District of New York announced that RONALD BAUER was sentenced to 20 months in prison for manipulating seven different stocks in a “pump-and-dump” scheme designed to fraudulently inflate the value of BAUER’s own shares in those companies. BAUER pleaded guilty on November 4, 2024.
According to the Indictment, public filings, and statements made in court proceedings, BAUER, a Canadian-UK citizen, orchestrated multiple “pump-and-dump” schemes after previously being sanctioned by the SEC in 2006 when, without admitting or denying the allegations, BAUER consented to the entry of a judgment against him providing for injunctive relief, barring BAUER from serving as an officer or director of a public company or participating in an offering of penny stock for a period of five years, and payment of disgorgement of $840,000.
In his guilty plea, BAUER admitted to securities fraud involving seven issuers: Cantabio Pharmaceuticals Inc. (CTBO) (previously Lion Consulting Group (LIOC)); Virtus Oil and Gas Corp. (VOIL) (previously Curry Gold Corp. (CURGD)); Steampunk Wizards (SPWZ) (previously Freedom Petroleum (FPET) and now known as Tianci International Inc (CIIT)); Black Stallion Oil and Gas Inc. (BLKG) (previously Secure IT Corp.); PetroTerra Corp. (previously Loran Connection Corp (LRNC) and now known as Transportation and Logistics Systems Inc (TLSS)); Black River Petroleum (BRPC) (previously American Copper Corp. (AMCU) and now known as Viva Entertainment Group, Inc. (OTTV)); and Cyberfort Software Inc. (CYBF) (previously Patriot Berry Farms (PBFI)) (collectively, the “Issuers”).
His sophisticated scheme involved gaining controlling interest of unrestricted stock, then concealing ownership by distributing shares among nominee entities through a Swiss corporation called Blacklight, S.A. While maintaining behind-the-scenes trading authority and significant influence over company management, BAUER and his co-conspirators orchestrated purposeless “match trades” —i.e., placing buy and sell orders in the same stock on the same day—and funded promotional campaigns without disclosing their controlling interest or intent to sell. They took deliberate steps to hide that nominee entities were funding these promotions. During or shortly after generating market interest, BAUER sold large percentages of holdings and collected the proceeds through the elaborate network of nominee entities he controlled.
In addition to his prison term, BAUER, 49, of London, United Kingdom, was sentenced to three years of supervised release and ordered to forfeit approximately $4,377,228.74.
Details of the Scheme
According to court documents, BAUER and his co-conspirators, including his co-defendants, Craig Auringer, Peter Mihaylov, and Daniel Ferris, made tens of millions of dollars in illegal profits by engaging in pump and dumps of U.S. securities traded on the over-the-counter (“OTC”) markets as early as 2013.
By 2016, BAUER and his co-conspirators started working with the principals of Blacklight, S.A., a Swiss corporation that provided a one-stop shop offering services to market manipulators like BAUER. Blacklight, for example, held the physical share certificates for the companies that would be pumped and dumped, maintained records distributing the shares amongst “nominee” accounts that purported to officially own the shares on behalf of a straw owner whose name BAUER and others used to hide their control of the companies, executed trades in the Issuers’ shares using relationships with different brokerages across the globe, and even provided encrypted email and burner cellphone services to high-value clients like BAUER.
Generally, the scheme followed several predictable steps. First, BAUER or one of his co-conspirators would identify a thinly traded penny stock (the issuer) to use to execute the scheme. Through Blacklight, the Bauer group would purchase shares amounting to a controlling interest (i.e., more than 50%) in the issuer on the OTC markets.
The Bauer group would frequently purchase a “shell” issuer, that is, an issuer that had a publicly traded security but minimal assets and business operations. After acquiring the issuer, BAUER and his co-conspirators would install a friendly management team and change the name of the company and ticker to match the business they wanted to promote. For example, for Cantabio, the Bauer group initially purchased a controlling stake in a company called Lion Consulting Group, Inc., which traded on the OTC markets under the ticker LIOC, and then changed its name to Cantabio and its ticker to CTBO. Purchasing a shell issuer typically involved acquiring the issuer’s physical share certificates, which BAUER and his co-conspirators caused to be delivered to Blacklight in Geneva to be stored in Blacklight’s safe.
Rule 13d-1 of the Securities Exchange Act of 1934 requires any person who acquires more than 5% of a class of registered voting equity to file publicly a Schedule 13D form disclosing their stake. In order to avoid filing the required Schedule 13D and hide their controlling stake in these Issuers, the defendant and his co-conspirators, working through Blacklight, used so-called “nominee” accounts to allocate their control blocks to straw owners. When the group was ready to commence a pump, Blacklight would allocate the physical share certificates in its safe to nominees, each control group member, like BAUER, selected, such that no nominee possessed more than 5% of the outstanding shares and would be required to file a Schedule 13D. Among others, BAUER used the names of a friend, of his parents, of his co-defendant Farris, of a Nigerian national, and of that Nigeran man’s ex-girlfriend in Nigeria as straw owners of his nominee entities, using generic names like “World Time Ltd.,” “Alveston Partners Inc, ” and “Pointfort.” Blacklight kept records detailing which nominee entities had received which shares, as well as keys linking the nominee entities to their true beneficial owner, for example, using the nickname “Patek” for BAUER, a reference to the luxury watches he favored. BAUER and his co-conspirators at all times retained trading authority over the shares held in their nominee accounts.
With control of the issuer secure, BAUER and his codefendants then took steps to make the issuer appear more attractive to duped investors than an illiquid security with no trading history. For example, the defendant directed Blacklight to engage in match trades—i.e., placing both buy and sell orders in the same stock on the same day—for no legitimate economic purpose. These match trades served multiple purposes. First, they created trading history for the investing public to reference against before falling for the pump (like the 10,000 share match trade in Black Stallion Blacklight engaged in at BAUER’s direction five months prior to commencing the “pump,” or the 1,000 share Cantabio match trade that set the stock’s first market price after the ticker changed from LIOC to CTBO). Second, match trades were used to support a stock price during the “dump” by creating the appearance of buying activity. Third, they were used to artificially prop up the stock price in order to comply with certain brokerage rules that limited the ability of BAUER and his co-conspirators to sell shares trading at less than $.10 per share (like the 190,000 Black Stallion match trade BAUER instructed Blacklight to engage in at $.095 and change so that he could continue to sell out of his Black Stallion position).
After securing control of the issuer, BAUER and his co-conspirators then began the “pump” portion of the scheme—creating promotional materials to tout the stock of the companies they had purchased in order to convince ordinary investors to purchase the shares and drive up the price. These promotional materials frequently included hyperbolic statements about the company’s future prospects—for example, for Steampunk Wizards, a video game company from Eastern Europe purportedly working on a Candy Crush mobile phone game spinoff, the tout stated that investors could walk away with gains of over 2,000 percent and that the stock represented “the greatest wealth generating scenario in a century.” For Black Stallion, the tout claimed that the company had started an “exploration program” for oil and gas production where there could be oil and gas worth $2.1 billion as part of the Canadian oil and gas fields. And, for Cantabio, BAUER and his associates prepared a “special report” by the “BioScience Report” claiming that, based on hyperbolic and misleadingly presented aspects of Cantabio’s operations, the target price for CTBO was $22 per share, even though at time it was trading at under $3 per share.
BAUER and his co-conspirators used mailing lists they had acquired to blast these promotional materials by fax and email to U.S.-based investors. In addition, through his installation of friendly management in these companies, BAUER and his co-conspirators also caused his allies in the company to issue press releases timed to mirror and maximize the impact of the touts. While BAUER took a hands-on role in the preparation of the promotional materials—down to design choices like making sure they used green coloring instead of red, and that the current trading price was always at least $1—he and his co-conspirators took great lengths to hide their roles financing and distributing the promotional materials. For example, with Blacklight’s assistance, they created shell companies like “Herwick Ltd.” and “Ikon Media” that would be disclosed as the entities funding and preparing the promotional materials, and they paid for the promotional campaigns through wire transfers set up by Blacklight.
The disclosures on the promotional materials misled investors in three material respects. First, by using shell entities to hide their true funding source, investors were duped into believing the promotional materials were prepared by unaffiliated, independent third parties, as opposed to the people who invested in the company and had a vested interest in the stock price going up. Second, the materials hid not only that the organizers of the promotional campaign were invested in the companies, but that they held controlling stakes in those companies—and in certain instances, had installed their management teams—which, had investors known, would have decreased the value of the publicly available stock by informing them further of the importance of the stock price to the control group and its ability to affect the company. Third, in touting the expectation or possibility that these companies’ stock prices would skyrocket astronomically, the promotional materials did not disclose that BAUER and his crew planned to sell their shares during the promotional campaign and well before the share price hit those levels—the “dump”—thereby putting downward pressure on the stock price and making these wild claims virtually unachievable from the start.
As the promotional campaigns successfully increased the stock price of the companies BAUER and his co-conspirators controlled, BAUER personally directed the dump, instructing Blacklight’s principal to sell the acquired shares in tranches to profit off the pump. For example, for Cantabio, text messages and trading records show BAUER texted Blacklight’s principal to start selling shares once the price rose from approximately $1 per share to between $2.40 and $3.50 a share. BAUER sent detailed instructions, such as selling in 4,000 to 5,000 share tranches for each $.01 that the share price decreased, allowing BAUER to profit from the pump without selling in such large quantities that would cause the share price to bottom out entirely too quickly. Similarly, for Steampunk Wizards, BAUER-controlled nominee entities like World Time and Pointfort sold hundreds of thousands of SPWZ shares once the price had increased by nearly 100% after the promotional campaign commenced, from an average of $0.62 to $1.30 per share before the pump to between $1.15 and $2.12 after the pump. And BAUER caused World Time to sell out its Blacklight shares after that promotional campaign pumped the share price from $.76 per share to $2.12 per share. Text messages between BAUER, Blacklight principals like Kenneth Ciapala, and Bauer’s co-conspirators such as Craig Auringer show that Bauer exercised final trading authority over all of the positions controlled by the Bauer group, and that Blacklight would not execute trades in any nominee account in that group—even those belonging to co-conspirators like Auringer—unless BAUER approved.
With the dump accomplished, BAUER then instructed Blacklight to allocate the proceeds to the control group partners proportionate to their interests, pay expenses, and often roll profits into the next pump.
Parallel SEC Action
On April 14, 2022, the SEC charged Ronald Bauer and his associates, Craig James Auringer, Adam Christopher Kambeitz, Alon Friedlander, Massimiliano (“Max”) Pozzoni, Daniel Mark Ferris, Petar Dmitrov Mihaylov, and David Sidoo – all of whom reside outside the U.S. – engaged in a complex scheme spanning from at least 2006 to 2020 that generated over $145 million from unlawful sales of at least 17 penny stocks quoted on U.S. markets.
According to the SEC’s complaint, the defendant’s first step in the scheme was to identify a shell company issuer and gain control both of its management and of its purportedly freely trading stock. In some cases, the defendants secretly controlled all the free trading stock registered as part of the shell’s S-1 registration statement, using nominees and various foreign entities to hide their ownership.
The defendants then allegedly coordinated and funded misleading promotional campaigns, surreptitiously unloaded massive quantities of each stock into the very price and demand rises triggered by those campaigns, and directed their illicit proceeds from those illegal sales through multiple networks of offshore shell companies and financial accounts.
According to the complaint, the defendants, over time, operated in various combinations and played varying roles. The public issuers named in the Complaint included Black Stallion Oil and Gas Inc, PetroTerra Corp, Virtus Oil & Gas Corp, Gray Fox Petroleum Corp, Bison Petroleum Corp, Lone Star Gold Inc, True North Energy Corp, North American Oil & Gas Corp, American Helium Inc, Cantabio Pharmaceuticals Inc, Steampunk Wizards Inc., Polar Petroleum Corp, Patriot Berry Farms Inc., Black River Petroleum Corp, Cyberfort Software Inc., Lifelogger Technologies Corp., Blue Eagle Lithium Inc.
The SEC action against BAUER had been on pause while the criminal case ran its course. It should come to a pretty quick resolution now that the criminal case has been resolved.
Blacklight SA and Related Actions
Blacklight SA was named in SEC litigation on January 2, 2020, along with its principal operator, Kenneth Ciapala. Ciapala and Blacklight were also indicted in 2019. Ciapala appears to be cooperating based on the dozens of sealed documents in the case since April 2021.
Blacklight SA can be linked to several other indictments and SEC actions that we have also written about, including:
SEC Charges 15 Individuals in a $194 Million International Penny Stock Fraud
Undercover Sting Takes Down Francis Biller, Raymond Dove, and Chester Alvarez in Boiler Room Scheme
More Individuals Charged in Billion Dollar Penny Stock Pump and Dump/Money Laundering Operation
SEC Charges Ubong Uboh and Tyler Crockett for Using a Call Room to Manipulate Stocks
Ulrick Debo and Kenneth Ciapala Charged By DOJ and SEC
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. For more information about this securities law blog post or to speak with a Securities Attorney, please contact Brenda Hamilton at 200 E Palmetto Rd, Suite 103, Boca Raton, Florida, (561) 416-8956, or by email at [email protected].
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