Edward Withrow, III, Stock-Fraud Scheme, Massachusetts 2023

BOSTON – In a shocking turn of events, the chairman of a Boston-based biomedical company, Edward Withrow, III, 51, of Malibu, Calif., was arrested this morning on charges arising out of his participation in a scheme to defraud the market for the publicly traded stock of the company.

The charges against Withrow include one count of conspiracy, one count of securities fraud, two counts of wire fraud, and two counts of making false statements. His co-conspirator, Marcobabini, 54, was charged with one count of conspiracy, one count of securities fraud, and two counts of wire fraud.

The case stems from an investigation focusing on preventing fraud in the microcap stock markets. Microcap companies are small publicly traded companies whose stock often trades at pennies per share. Fraud in the microcap markets is of increasing concern to regulators as such markets have proven to be fertile grounds for fraud and abuse.

The indictment alleges that in November 2012, Withrow became the chairman of Endeavor Power Corporation (Endeavor), a Boston-based biomedical company focused on infectious diseases, and became a significant owner of Endeavor’s stock. Withrow and his co-conspirators allegedly orchestrated a promotional campaign and engaged in manipulative trading designed to inflate investor interest in Endeavor’s publicly traded stock.

The charges follow a series of cases filed by the SEC and the U.S. Attorney for the District of Massachusetts in which more than 20 individuals have been criminally charged and convicted for using kickbacks and other schemes to trigger investment in, or manipulate the stock of, thinly-traded stocks.

The charge of conspiracy and securities fraud provides a sentence of no greater than 25 years in prison, three years of supervised release, and a fine of $250,000, or twice the gross gain or loss. The charge of wire fraud provides a sentence of no greater than 20 years in prison, three years of supervised release, and a fine of $250,000, or twice the gross gain or loss.

Endeavor Power Corporation is a biotech company focused on infectious diseases. The company’s stock was suspended in March 2013 by the SEC, which stopped the scheme in progress.

The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law. The details contained in the indictment are allegations.

This case was brought in coordination with President Barack Obama’s administration.

The details of Withrow’s arrest and charges come as a shocking revelation to investors and the public, highlighting the risks of investing in microcap stocks.

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