Vancouver-orchestrated $1 billion offshore shell scheme adds two more defendants

Two B.C. residents made hundreds of thousands of dollars in net profits by manipulating two U.S. companies as insiders, the SEC alleges

Jeremy Horner/Corbis Documentary/Getty

Two more B.C. residents are facing stock fraud charges from the U.S. Securities and Exchange Commission (SEC) in connection with an alleged billion-dollar scheme orchestrated by West Vancouver offshore shell facilitator Fred Sharp.

B.C. residents Vincenzo Carnovale, 44, a dual citizen of Canada and Italy, and Amar Bahadoorsingh, 51, a dual citizen of Canada and the United Kingdom, are charged with multiple infractions of the U.S. Securities Act

The commission alleges a stock manipulation scheme – commonly referred to as a pump-and-dump – with various connections to Vancouver. 

“Their goal,” stated the commission, “was to secretly gain control of thinly-traded microcap companies, hire stock promoters to generate demand for their shares, and then profit by selling those shares illegally to unsuspecting investors.

The scheme utilized a complex network of offshore accounts, as set out in charging documents filed by the commission in the U.S. District Court of Massachusetts on December 2.

Between 2016 and 2020, Carnovale and Bahadoorsingh took control of two U.S. public “penny stock” companies – Momentous Holdings Corp. and Uneeqo Inc. – by amassing millions of shares, then allegedly concealing ownership of those shares in offshore accounts set up by Sharp, who is facing criminal charges in Boston.

The SEC said the duo then cooked the companies’ books, promoted the stocks with touts and marketing materials and lied to brokers to sell their shares illegally to unwitting investors in the public markets, according to the commission.

The SEC, which was assisted by the BC Securities Commission and RCMP, as well as authorities in Curaçao, Singapore, Hong Kong and Mauritius, described in some detail how the alleged scheme worked.

For the alcoholic beverage company Momentous, Carnovale directed stock certificates be held with Sharp’s Vancouver-based organization dubbed the “Sharp Group” and Switzerland-based entity Wintercap SA, which purported to be an asset manager. These entities “were actually in the business of helping their clients disguise control and ownership of penny stocks.”

As well, Carnovale and Bahadoorsingh are alleged to have transferred large tranches of Momentous shares to nominee shareholding entities they controlled in Wyoming and Hong Kong.

Next, the SEC said, they fabricated documents to deceive brokerage firms, in order to sell the shares to the public. This was required to complete the scheme, as the shares would otherwise have trade restrictions on them, as Carnovale and Bahadoorsingh were controlling entities of the company.

Finally, “Carnovale and Bahadoorsingh’s efforts to promote Momentous stock led to a significant increase in the stock’s price and trading volume in April 2020.”

A similar process allegedly took place for mining company Uneeqo.

“Carnovale knew, or was reckless in not knowing, that the promoters he hired to tout Uneeqo would not disclose that he paid for the promotion,” the commission alleges.

The SEC obtained encrypted text messages from Carnovale to workers at Wintercap upon sale of a chunk of overvalued shares.

“Wintercap personnel informed him: ‘You SOLD 115k UNEQ @ 0.2754.’ Carnovale responded: ‘Have a bottle of wine on me tonight.’ He later added, ‘When I make my way back to Europe in couple months we have a dinner on me no limit.’”

It is not stated clearly how much the pair profited in total, but the commission notes $509,000 was netted in Uneeqo in September 2016 and $279,000 was netted from Momentous in April 2020.

The SEC seeks permanent injunctions, repayment of allegedly ill-gotten gains, civil penalties, and penny stock bars against Carnovale and Bahadoorsingh.

Bahadoorsingh also faces additional charges for another Sharp Group-related scheme that includes alleged illegal activity utilizing Vancouver-based company Garmatex Holdings Ltd., later named Evolution Blockchain Group, as well as Vancouver public relations consultants.

Profits realized by Carnovale and Bahadoorsingh in this case are part of a broader scheme conducted by Sharp and others, as alleged by the commission and Federal Bureau of Investigation.

The commission claims the Sharp Group was central to a decade-long offshore shell scheme that realized $770 million in net profit for company officers (insiders), via illegal trading of over $1 billion worth of shares in hundreds of U.S.-listed public companies.

Sharp and associates Courtney Kelln, 41, of Surrey, Zhiying Yvonne Gasarch, 49, of Richmond, and Canadian Avtar Dhillon, 60, living in Long Beach, have been criminally charged with fraud and conspiracy to commit fraud.

Facing related civil charges by the commission are B.C. residents Paul Sexton, Graham Taylor and Mike Veldhuis.

The United States Department of Justice has issued an arrest warrant for Sharp and frozen his assets. They are now proceeding with default judgments against him, as he has failed to respond to authorities.

gwood@glaciermedia.ca