A Canadian man has been sentenced to four years in prison in the United States for running an international money-laundering scheme out of Costa Rica.
The conviction against Michael Randles relates to a scheme that involved a brokerage located in San Jose, court records show. The brokerage operated as Moneyline and under various other names, including Trinity Asset Services, Sandias Azucaradas, and Vanilla Sky.
Randles, 49, had pleaded guilty in October to a single count of conspiracy to commit money laundering.
According to an agreed statement of facts, Moneyline opened in 2002 and began primarily trading in penny stocks through numerous brokerage accounts in the U.S. and Europe.
"The accounts were used in part to conceal the true source, ownership and control of the shares and proceeds of the liquidation of the shares," the statement of facts says.
Among the shares the brokerages handled were those in a Colorado-based company known as Bryn Resources, which was supposedly involved in mining and exploration in Canada. However, Bryn was in reality just a name.
According to his plea deal, Randles and his co-accused knowingly used Moneyline and other brokerages to help clients launder about $1 million USD in proceeds from a "pump and dump" campaign related to 3.5-million Bryn shares.
The form of penny stock fraud involves artificially inflating the price of an owned stock by making exaggerated positive statements about the company. Gullible investors buy in, driving up the price, at which point the conspirators dump their stocks for a handsome profit and the price of the shares tank.
"Their outrageous claims by their in-house newsletter writers were just pure bogus," his co-accused Harold Gallison is heard telling Randles in a recorded June 2010 phone call about one of Moneyline's clients.
Randles' sentence in Eastern Virginia District Court comes in addition to the 11 months he had already spent in detention in Spain contesting extradition to the United States. He will also have to spend three years on probation, make full restitution — amount yet to be decided — and forfeit any assets related to his crime.
District Judge Anthony Trenga accepted the prosecution's assertion that Randles was "very active" in Moneyline and its request for a five-year term — less credit for the time served in Spain. The defence essentially wanted him sentenced to the time he had already spent behind bars along with two years probation. Trenga also granted Randles' request to be jailed in either Littleton, Colo., or Miami.
The prosecution agreed it would not get in the way of allowing him to serve his sentence in Canada if he applies for transfer and both federal governments agree to take him.
Three of his co-conspirators had previously pleaded guilty. Gallison was sentenced to almost 10 years in prison, while the other two were given probation.