Jordan and Prange, Securities Fraud, Massachusetts 2013

BOSTON, Massachusetts – In a devastating blow to those who believe the stock market is a level playing field, businessmen John C. Jordan, 62, and James Prange, 62, were convicted of their roles in a securities fraud scheme.

Jordan, a California-based businessman, and Prange, a self-described financing consultant to small and emerging companies, were found guilty of their involvement in a conspiracy to pay secret kickbacks to an investment fund representative in exchange for having the investment fund buy stock in publicly-traded companies that traded on the over-the-counter securities market.

The defendants were convicted for their roles in a conspiracy to pay secret kickbacks to an investment fund representative in exchange for having the investment fund buy stock in publicly-traded companies that traded on the over-the-counter securities market. The kickbacks were concealed through the use of sham consulting agreements and other fraudulent documents.

What the defendants did not know was that the purported investment fund representative was actually an undercover agent with the Federal Bureau of Investigation. The convictions 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.

“It matters not whether the stock is trading at pennies per share or hundreds of dollars. Fraud is fraud and will be stringently regulated by federal authorities,” said United States Attorney Carmen M. Ortiz. “We will continue to work with our counterparts to identify and prosecute individuals engaged in schemes with the aim to manipulate the securities market and defraud investors.”

Defendant John C. Jordan, of Cameron Park, California, was convicted of conspiracy to commit securities fraud, four counts of wire fraud, and mail fraud. Prange, of Greenbush, Wisconsin, was convicted of three counts of conspiracy to commit securities fraud and eight counts of wire fraud for his role in transactions involving Vida Life and two other publicly-traded companies, China Wi-Max Communications, Inc., and the Small Business Company, Inc.

The statutory maximum penalties for the securities fraud conspiracy charges are 25 years in prison, followed by three years of supervised release and a $250,000 fine. The statutory maximum penalties for mail and wire fraud are 20 years in prison, followed by three years of supervised release and a $250,000 fine. U.S. District Court Judge Nathaniel M. Gorton scheduled sentencing for August 8, 2013.

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