The United States Securities Commission has charged Vancouver businessman David Sidoo with securities fraud offenses nearly two years after he was sentenced to prison for criminal wire fraud for his involvement in the admissions to American universities and corruption.
On April 14, the commission filed a civil lawsuit in the Southern District of New York against Sidoo and seven other men for allegedly orchestrating a complex international stock manipulation scheme that generated at least $145 million in illicit profits. Sidoo is charged with fraud in the offer or sale of securities, fraud in the purchase or sale of securities and unregistered offers of securities for his alleged participation in two “pump and dump” transactions.
Once a prominent Vancouver-based stock promoter and former BC Lions football player, the 62-year-old faces a permanent ban from the US stock market and fines if convicted.
According to the complaint, the central figure in the alleged scheme is Canadian citizen Ronald Bauer, who allegedly teamed up with others to illegally manipulate the shares of at least 17 public companies. In a separate case that emerged the same day, Bauer, 46, was criminally charged with multiple counts of fraud and conspiracy to launder money. In 2006, Bauer was banned from running companies for five years after settling allegations of market manipulation with the SEC.
“Bauer oversaw and coordinated virtually every aspect of every penny stock fraud perpetrated by the various groups he headed,” the commission said.
Sidoo is accused of partnering with Bauer to use two public companies he ran – one registered in British Columbia – to carry out pumps and dumps.
According to the complaint, Bauer and others amassed millions of cheap insider shares and then hid them in an array of international private shell entities. Then they would have heavily marketed the companies to attract misguided investor interest before improperly selling the shares when their value would have generated large profits at the expense of investors.
“Like others, Sidoo used offshore omnibus vehicles and shell companies to conceal the fact that he was the beneficiary of stock sales and failed to both disclose his beneficial ownership and transactions and to record its stock sales as required by law,” the commission alleges.
The complaint states that the North American Oil and Gas Corp. of Sidoo generated $15.23 million in illicit proceeds between July 2013 and August 2014. In contrast, American Helium Inc. generated $1.45 million between March 2018 and February 2020.
The alleged illegal activity occurred after Sidoo was arrested on March 8, 2019, in San Jose, California on U.S. Justice Department charges related to the high-profile U.S. college admissions and bribery scandal. Sidoo was sentenced to three months in federal prison after finally admitting to paying $200,000 to have test expert Mark Riddell take his son’s entrance exams. Riddell was sentenced to five months in prison this month for his part in the scheme.
“Between March 2018 and February 2020, accounts associated with the ‘Sidoo & Bauer Ring Coalition’ sold at least 7.64 million shares of American Helium, for proceeds of at least $1.45 million,” notes the complaint.
“Sidoo was involved in the pledge of nearly every company used for the American Helium promotional campaign” which “caused a dramatic increase in demand for American Helium stock,” the complaint states.
The commission shows intercepted emails to and from Sidoo and/or his office associate showing how Sidoo first amassed stock in American Helium before promoting it.
Sidoo initially merged three BC companies into American Helium and used an anonymous Vancouver broker to set up numerous accounts to receive and sell the shares. Sidoo then sold new shares of the company to hand-picked entities he ultimately controlled, according to the complaint.
“Note that David [Sidoo] manages the process and carefully monitors [subscriber] list and who else needs to be added,” reads an email from a Sidoo associate to the alleged co-conspirators in the complaint.
The commission further outlines some of the alleged manipulations Sidoo allegedly undertook as a director of the North American Oil and Gas Corp.
Sidoo first bought a Nevada-based public shell company for $350,000 (through a Swiss entity) and split the shares 19:1, leaving him and Bauer with nearly 30 million shares, or a control of 92% of all shares.
“By having their North American Oil shares allotted in several different tranches, each falling below 5% of the company’s total outstanding shares, to various nominee shareholders and omnibus vehicles administered by various offshore platforms, the Sidoo Defendants, Bauer and Auringer created the false appearance … that multiple different, unrelated offshore companies each owned less than 5% of the shares of North American Oil,” the commission claims.
The commission alleges that Sidoo understood federal securities laws and was therefore aware of his illegal actions: “For his part, Sidoo had worked for eight years as a stockbroker…and as such had exposure important and therefore a knowledge of federal securities laws”. provisions relating to the fight against fraud, registration, declaration of beneficial owners and declaration of insider transactions.
The commission brought the charges to New York because investors there bought shares in the over-the-counter markets.
Sidoo spent three months at the SeaTac Federal Detention Center, from October 2000 to December 2000. Following his conviction, the provincial government stripped Sidoo of his Order of British Columbia.
Sidoo resides in a $35 million home on Belmont Avenue in Vancouver’s West Point Gray neighborhood near UBC. He ran several Vancouver public companies, none of which were commercially successful.
gwood@glaciermedia.ca
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