(Photo by Diego Radzinschi)
Hillsboro Beach attorney James M. Schneider is one of at least two lawyers charged with securities fraud.
Schneider and Nevada City, California, attorney Andrew Wilson are among nine defendants nationwide accused of selling stock in shell companies they secretly controlled during a seven-year period.
The lawyers’ troubled mounted Wednesday when the U.S. Securities and Exchange Commission filed a parallel civil enforcement action, accusing them of participating in a fraud involving 22 “blank-check” companies “secretly bound for reverse mergers.” Blank-check companies “have no operations, making them attractive targets for those seeking reverse mergers for use in pump-and-dump schemes,” according to prosecutors.
Wilson’s marketing material describes him as an AV-rated attorney—a high ranking based on the Martindale-Hubbell Peer Review Ratings. He became a member of the State Bar of California in 1974 and is founder and principal at Wilson Campilongo, according to his website.
Schneider and Wilson, who faces one civil charge, did not respond to requests for comment.
Seven other men from three states have been convicted in related cases: Florida residents Steven Sanders, 73, of Lake Worth, Ian Kass, 45, of Fort Lauderdale, Alvin S. Mirman, 78, and Sheldon Rose, 77, of Sarasota; California residents Daniel McKelvey, 49, of Foster City, and Jeffrey L. Lamson, 51, of El Dorado Hills; and David Lubin, 52, of West Hempstead, New York. Six have been sentenced, and Lubin is scheduled to appear for sentencing Nov. 2 before U.S. District Judge Marcia G. Cooke in Miami.
Prosecutors meanwhile charged Schneider with one count of conspiracy to commit securities and wire fraud, five counts of securities fraud, six counts of wire fraud, conspiracy to commit money laundering and 20 counts of money laundering.
Schneider, 76, has been a member of the Florida bar for more than 41 years and is affiliated with Pearlman Schneider. The firm has since changed its name.
Schneider’s bar file lists him as a member in good standing with no disciplinary history in the last 10 years. But prosecutors claim he committed several crimes as part of a ring that secretly controlled shell companies registered with the SEC and sold using fraudulent financial documents.
From March 2008 to May 2015, Schneider allegedly worked with Sanders, McKelvey, Mirman, Lamson, Lubin and others to create shell companies, and then filed fraudulent SEC documents listing a nominee chief executive officer. The alleged co-conspirators would present the CEO as the owner and list various shareholders, but they maintained full control over the block of shares. The shares would later become unrestricted, or “free trading,” and participants secretly sold them to shell buyers and got SEC approval to sell publicly, or over the counter.
“Using false and fraudulent documentation describing the companies’ business purpose and share ownership, the principals would then obtain approval for the shares of the companies to be sold publicly over the counter,” according to a release from the Department of Justice. Thereafter, the principals would sell the companies to shell buyers who would secretly obtain both the control shares and the purported “free trading” shares without disclosure of this common control and simultaneous sale to the SEC or the investing public. This would allow the shell buyers to engage in stock manipulation or pump and dump schemes using the “free trading” shares.
Schneider allegedly aided co-conspirators by appearing to give credence to their offerings. He prepared false billing statements to create the illusion he worked for the straw CEOS, according to the indictment. Prosecutors say he also “authored false and fraudulent legal opinion letters indicating that shares of the companies were owned by persons who were not ‘affiliates,’ when in truth … the shares were owned and controlled by the conspirators.”
Prosecutors said Schneider also performed “so-called escrow services” during the sale of the shell companies, participating in illegal sales and wiring more than $5.6 million to his alleged conspirators’ bank accounts.
Schneider faces a maximum statutory sentence of 25 years in prison for the securities fraud conspiracy count, 25 years each for the securities fraud counts, and 10 years each for the conspiracy to commit money laundering and money laundering counts. He also faces a fine of up to $250,000, or double the proceeds from each charge. His case is pending before U.S. District Judge Federico A. Moreno in Miami.