BOSTON – BOSTON’S FINANCING SCENE HAS BEEN ROCKED BY A HIGH-PROFILE SENTENCING. JAMES L. PRANGE, 63, OF GREENBUSH, WIS., WAS SENTENCED TO 30 MONTHS IN PRISON, TWO YEARS OF SUPERVISED RELEASE, A $15,250 FINE AND FORFEITURE FOR HIS ROLE IN A KICKBACK SCHEME.
Prange was convicted by a jury in May 2013 of conspiracy to commit securities fraud, wire fraud and mail fraud. The scheme involved paying secret kickbacks to an investment fund representative who had agreed to use the fund’s money to buy stock in three companies that had hired Prange’s firm, Northern Equity, to help them raise capital. The kickbacks were concealed through the use of sham consulting agreements and other fraudulent documents.
The conviction and sentence followed a year-long investigation focusing on preventing fraud in the micro-cap stock markets. Microcap companies are small publicly traded companies whose stock often trades at pennies a 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.
Executives of three publicly traded companies who were also charged as part of the undercover operation were sentenced in the last two months. In August, Karen L. Person, 62, of Las Vegas, Nev., the chief executive officer of SBCO, Inc., and John C. Jordan, 62, of Cameron Park, Calif., the chief executive officer of Vida Life International Ltd., were each sentenced to 30 months in prison for their roles in the scheme. Person pleaded guilty to conspiracy to commit securities fraud and Jordan was convicted after trial on multiple counts of conspiracy to commit securities fraud and wire fraud. In July, Steven Berman, 50, of Ohio, the former chief executive officer of China Wi-Max Communications, Inc., and Richard Kranitz, 69, a Wisconsin securities attorney who served as an adviser and a member of the board of directors of China Wi-Max, were each sentenced to 18 months after pleading guilty to conspiracy to commit securities fraud.
The Securities and Exchange Commission, which conducted a parallel civil investigation alongside the FBI undercover operation, cooperated with criminal authorities in bringing these, and charges against 10 other defendants who participated in the kickback scheme. Eight of those defendants have already pleaded guilty to charges arising out of their involvement in the scheme.
United States Attorney Carmen M. Ortiz and Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The case was prosecuted by Assistant U.S. Attorneys Sarah E. Walters, Stephen E. Frank, and Vassili Thomadakis of Ortiz’s Economic Crimes Unit.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.
Defendant: James L. Prange
Criminal Charges: Conspiracy to commit securities fraud, wire fraud and mail fraud
City and State: Boston, Massachusetts
Date: Unknown
Sentence: 30 months in prison, two years of supervised release, a $15,250 fine and forfeiture
Dollar Amounts: $15,250 fine and forfeiture
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Key Facts
- State: Massachusetts
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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