Canadian national Morrie Tobin, 57, of Los Angeles, Calif., is going to prison for his central role in a massive, years-long securities fraud scheme that sought to generate $15 million in illicit profits through manipulation of microcap stocks. Tobin was sentenced today in federal court in Boston by U.S. District Court Judge Nathaniel M. Gorton to one year and one day in prison, two years of supervised release, a $100,000 fine, and forfeiture of $4 million.
Tobin pleaded guilty in February 2019 to one count of conspiracy to commit securities fraud and one count of securities fraud. From 2013 to 2018, he worked alongside co-conspirators Milan Patel, Matthew Ledinva, and Roger Knox to secretly control and manipulate the stock prices of shell companies. Using offshore entities and paid promoters, the group inflated share values through deceptive marketing and rigged trading, then dumped their shares for millions in profits while investors were left holding worthless stock.
The scheme reached a critical phase when Tobin and others acquired control of GS Valet, a nearly dormant public shell, and rebranded it as International Metals Streaming Corporation (IMST). They distributed IMST shares across four offshore entities under false names. Between December 2016 and June 2017, the group executed a reverse merger with Environmental Packing Technology (EPTI), turning it into a publicly traded company and dumping 10.5 million shares into brokerage accounts controlled by Knox’s asset management firm and another brokerage.
During the promotion phase, the conspirators raised $2.9 million through private placements and funneled portions of that money to third-party promoters to artificially boost EPTI’s share price. From June 9 to June 27, 2017, as the stock surged, they sold off shares held in offshore accounts, raking in approximately $1,519,182. The Securities and Exchange Commission halted trading in EPTI shares on June 27, cutting the scheme short. The court determined Tobin and his co-conspirators intended to generate $15 million based on the volume of shares under their control.
Other key players are also facing justice. Milan Patel pleaded guilty in February 2019 and was scheduled for sentencing on August 13, 2020. Matthew Ledinva was sentenced in June 2020 to 30 months of probation and ordered to pay a $50,000 fine. Roger Knox has also pleaded guilty and is set for sentencing on September 30, 2020. Authorities emphasize that offshore shells and fake promotions won’t shield fraudsters from federal prosecution.
The case was announced by United States Attorney Andrew E. Lelling and Joseph R. Bonavolonta, Special Agent in Charge of the FBI’s Boston Field Division. The SEC’s Boston regional office assisted in the investigation. Assistant U.S. Attorneys Eric S. Rosen and James R. Drabick of the Securities, Financial and Cyber Fraud Unit are prosecuting the case, sending a clear message: Wall Street grifters will be hunted down and held accountable.
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Key Facts
- State: Massachusetts
- Agency: DOJ USAO
- Category: Fraud & Financial Crimes
- Source: Official Source ↗
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