A Las Vegas lawyer was indicted last month in what authorities called a securities fraud scheme to sell nearly 2 billion shares of a worthless penny stock for profit.
The local IRS Criminal Investigation field office announced the federal indictment Thursday.
In the 52-count indictment returned in Arizona, prosecutors said Benjamin Bunker, who was charged with two others, acted as an attorney providing letters and legal paperwork to convert the debt of a bankrupt heating and cooling technology company into a profit of more than $300,000.
Bunker, David Loflin and Heriberrto Cruz face charges of securities fraud, wire fraud, transactional money laundering and concealment money laundering.
According to the State Bar of Nevada website, Bunker has been licensed in Nevada since 2006. He could not immediately be reached for comment Thursday. An online listing for The Bunker Law Group PLLC stated that it was “permanently closed.”
According to the indictment, the trio and their unindicted co-conspirators sought host companies to sell the penny stock listed as GDGI, which was worthless with no assets and a negative bank balance, and which was traded in the over-the-counter market, rather than on a national stock exchange.
Through Bunker, the indictment alleges, the defendants made false statements to attorneys, stock transfer agents, regulatory agencies and others to convert the debt into shares of stock with an “unrestricted” status that could be sold without being registered with the Securities and Exchange Commission.
Loflin, of Louisiana, had experience with the technical requirements for debt conversion of penny stock, while Cruz, of California, provided penny stock marketing services, the indictment alleges.
According to the document, the group marketed the stock through various publications to bolster its sales price.
The indictment also alleges that Bunker signed phony attorney letters as part of reporting requirements, falsely stating that he had met with the directors of the company and discussed a company statement with management, and he wrote letters that “contained material misstatements and omissions concerning the true nature of the stock conversion.”