Actress Pamela Anderson promoted a stock involved in an alleged scheme.… (Luis Sinco / Los Angeles…)
Federal agents arrested 14 people – including a former deputy district attorney – for allegedly running a stock manipulation scheme from Southern California that cost investors more than $30 million.
Authorities said the scheme involved the heavy promotion of worthless stocks, which the perpetrators later sold for huge profits in a classic “pump-and-dump” scheme.
One of the stocks – for a company called frogads.com – was promoted in an infomercial by actress Pamela Anderson. She is not suspected of wrongdoing, said Thom Mrozek, a spokesman for the U.S. attorney’s office in Los Angeles.
Anderson could not immediately be reached.
Investigators with the FBI and Internal Revenue Service used wiretaps to secretly record thousands of telephone calls and text messages during a three-year investigation, building what U.S. Atty. Andre Birotte Jr. said was the most important evidence in the case.
One of the suspects was recorded saying one of the companies on which shares were traded simply did not exist: “There’s nothing in there. There’s nothing to the company. It’s monkey business,” the executive said, according to prosecutors.
“This scheme hurt innocent victims who were looking at the market, seeing high-volume trading and thinking, ‘This will be a good investment,’” Birotte said. “What they don’t know is it’s all a sham.”
The investigation is continuing and it’s possible that total investor losses could reach $300 million, Birotte said.
The scheme allegedly was led by Sherman Mazur of Westwood, whom Birotte described as “a serial market manipulator.” Mazur, 63, was convicted in the 1990s of bankruptcy fraud and tax evasion, prosecutors said in a motion asking that he be jailed without bail. He faces 30 felony charges and a possible sentence of more than 100 years in prison in the new case.
Also charged in the case were Regis Possino, 65, of Pacific Palisades, a former deputy district attorney who was disbarred in the 1980s following his conviction in a marijuana sales case. Another defendant is Joey Davis, a Los Feliz resident and head of a public relations firm that allegedly promoted some of the sham stocks.
Mazur, Possino and Davis could not immediately be reached for comment.
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