Three men were found guilty by a federal jury in Cheyenne this week stemming from two schemes to defraud investors in Wyoming and elsewhere in the United States.
Justin Herman, 50, of Pennsylvania and Charles Winters Jr., 61, of Florida were convicted of fraud and identity theft crimes. Ian Horn, 67, of Florida was acquitted of the charged fraud crimes, but convicted of making a false statement to the grand jury.
According to court documents and evidence presented at trial, Herman and Winters conspired with Robert “Bob” Mitchell, who pleaded guilty earlier this year, to “pump and dump” NuTech Energy Resources Inc. stock.
A “pump and dump” scheme is a form of securities fraud where the conspirators manipulate demand for a stock and the stock’s price, and then sell their worthless shares of the stock to the public at the artificially high price.
In this case, the conspirators bought control of a publicly traded shell company called EcoEmissions Solutions Inc. and changed the company’s name to NuTech Energy Resources, whose stock was sold under the ticker symbol NERG.
The conspirators released information online to create a false image for NuTech as a company located in Gillette that was operating gas wells in Wyoming using a patented technology. In reality, NuTech had no business, no revenue and no paid employees in Wyoming or elsewhere.
As part of the conspiracy, Herman and Winters used altered, backdated and forged documents to acquire 13 billion free-trading shares of NuTech common stock.
The conspirators then artificially inflated the market price of NuTech common stock by manipulative trading and releasing to the public false and misleading information about NuTech’s business prospects.
When the market price increased based on this false information, the conspirators turned around and sold their worthless NuTech shares to unwitting investors in the public market, including people in Wyoming and around the world.
According to the indictment, more than $1.3 million was stolen from about three dozen investors, most of whome lived in and around Gillette.
Horn is a Florida-licensed attorney. As part of the investigation, he was subpoenaed to testify before the grand jury in January 2019 because his name appeared on documents related to NuTech and because the money used by Mitchell and Herman to buy control of EcoEmissions was transferred through Horn’s bank accounts.
The jury found that Horn lied during his grand jury testimony about NuTech-related email communications that he falsely claimed he lost and could not access despite having access to his email and was forwarding relevant messages to Herman in December 2018.
Herman and Winters were each found guilty of conspiracy to commit securities fraud, securities fraud, conspiracy to commit wire fraud and multiple counts of aggravated identity theft.
Herman faces a mandatory two-year prison sentence and could be sentenced to a maximum of 53 years in prison.
Winters also faces a mandatory two-year prison sentence and could be sentenced to a maximum of 49 years in prison.
Horn was found guilty of making a false statement to the grand jury and could be sentenced to a maximum of five years in prison.
The defendants are scheduled to be sentenced on Jan. 5, 2022.
Mitchell is scheduled to be sentenced on Friday and could be sentenced to a maximum of 25 years in prison.
“These convictions are the direct result of a diligent investigation by a hardworking Postal Inspector and our partners at the Department of Interior Office of Inspector General and the U.S. Attorney’s Office for the District of Wyoming,” said Ruth Mendonça, Inspector in Charge of the Denver Division, which includes Wyoming. “Working together, their perseverance unraveled the defendants’ complex scheme to defraud over 2,300 victims and delivered the justice that each victim deserved. We are proud of the efforts to uphold the mission of the U.S. Postal Inspection Service to protect postal customers and consumers from fraudsters.”
