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An Alberta judge has sentenced stock promoter Caroline Meyers to two years in jail for her role in a 2010 pump-and-dump stock market scheme after 12,000 investors bought shares in a company she was touting.
Ms. Meyers, who is also known as Caroline Winsor and Caroline Danforth, will be the first person to serve jail time in Alberta in a pump-and-dump stock case. She pleaded guilty to selling securities without registration, not filing a prospectus, giving a false appearance of trading activity and creating an artificial price for shares of Calgary-based Coastal Pacific Mining Corp.
Her co-accused, Joseph Bucci, also pleaded guilty to the same charges last year and received an 18-month conditional sentence because of his poor health, which meant he did not serve time in jail.
In addition to the jail term, Provincial Court Justice Catherine Skene also permanently banned Ms. Meyers from trading securities or working in any role as a registrant in the securities industry. The Alberta Securities Commission laid the charges in court where jail sentences can be imposed.
Ms. Meyers and Mr. Bucci were accused of issuing a series of press releases and manipulating trading activity in shares of Coastal Pacific to convince thousands of investors to buy shares, which climbed as high as 50 cents each before becoming worthless as the scheme unwound.
ASC enforcement director Cynthia Campbell said penny stock frauds are becoming a growing problem across North America, relying on falsehoods to create an artificial demand for a company's shares.
"This causes real financial loss to those who traded in good faith on the information in the over-the-counter capital markets," Ms. Campbell said in a statement.
ASC spokeswoman Allison Trollope said it wasn't possible for the regulator to calculate how much all the buyers lost on their investments in Coastal Pacific, but the amount is in the "tens of millions" of dollars. At one point there were 12,000 shareholders who owned 60 million outstanding shares in Coastal Pacific.
Ms. Trollope said a limited number of shareholders may have profited if they sold before the price crashed, "but the vast majority of the shareholders received worthless shares for their real investment."
The ASC charged Ms. Meyers in 2013, but she left the country and moved to Europe.
The U.S. Securities and Exchange Commission also charged Ms. Meyers in a case involving fraudulent trading in different securities, and she was arrested in Spain in 2014 following an FBI investigation. Authorities transferred her to the U.S. where she pleaded guilty to the SEC charges, receiving a sentence in April, 2016, that was equal to the time she had already served in jail awaiting sentencing.
She returned to Canada this spring after her release and pleaded guilty in the Alberta case.
Janet McFarland