Canadian Trader Gets 3½ Years in $215M Penny Stock Scam

LOS ANGELES – The stench of greed and deceit hangs heavy over the financial district today as Colin Heatherington, 49, of Vancouver, Canada, was sentenced to 42 months in federal prison. The charge? A key role in a brazen penny stock manipulation scheme that bled investors out of more than $215 million. Heatherington isn’t acting alone; this was a coordinated hit on unsuspecting investors.

U.S. District Judge John A. Kronstadt didn’t just hand down the prison sentence. He also ordered Heatherington to fork over a staggering $215,815,031 in restitution, a debt shared with his co-defendant, Todd Michael Ficeto, 57, a former Beverly Hills stockbroker already convicted in this mess. Ficeto previously received a six-year federal prison sentence after a jury found him guilty of 18 felonies related to the scheme.

Heatherington pleaded guilty to one count of conspiracy to commit securities fraud and wire fraud back in February. His testimony revealed the operation ran from 2004 to June 2008, originating from Absolute Capital Management Holdings (Absolute Funds), a Cayman Island-based operation with offices in Mallorca, Spain. Heatherington, a securities trader, worked hand-in-glove with Florian Wilhelm Jürgen Homm, 64, the founder and chief investment officer of Absolute Funds – and now a fugitive from justice, indicted way back in March 2013.

The scheme was simple in its cruelty. Heatherington oversaw the purchase of billions of shares of U.S.-based penny stocks, then used manipulative tactics – including the shady practice of cross trading – to artificially inflate their value. This, in turn, boosted the reported value of Absolute Funds, lining the pockets of those at the top with millions in fraudulent management and performance fees. Heatherington and others also engaged in blatant self-dealing, selling their own shares of these inflated stocks *to* the Absolute Funds, essentially robbing Peter to pay themselves.

Bringing Heatherington to justice wasn’t easy. He initially dug in his heels in Canada, fighting extradition. It wasn’t until 2021 that he finally agreed to face the music in the United States. Meanwhile, Ficeto, who allowed the manipulated stocks to be traded through his company and reaped millions in fees and commissions, was already behind bars. This wasn’t just about inflated stock prices; it was about calculated betrayal and a callous disregard for the financial well-being of ordinary investors.

The FBI led the investigation, with crucial assistance from the Department of Justice’s Criminal Division’s Office of International Affairs, IRS Criminal Investigation, the Securities and Exchange Commission, and FINRA. Assistant U.S. Attorneys Cassie D. Palmer, Scott Paetty, and Ian V. Yanniello drove the prosecution home. While Heatherington and Ficeto are facing consequences, the fugitive Homm remains at large, a stark reminder that some perpetrators still evade justice in the shadowy world of high-stakes finance.