Ohio FBI busts $2 million hemp wine pump and dump scheme, sends 8 to prison
The Ohio United States Attorney Rebecca C. Lutzko announced the results of a federal investigation involving eight men who were charged in two cases with participating in a pump-and-dump scheme designed to inflate the stock price of Global Resources, Inc. using the symbol GBEN. It was a public company that purportedly planned to bring hemp-infused wine to market.
According to the statement, all the defendants pleaded guilty and were sentenced to a combined total of 165 months of imprisonment.
The defendants charged and convicted were Thomas Collins, 50, of Weatherford, Texas; Patrick Thomas, 50, of Carrollton, Texas; Hughe Duwayne Graham, 66, of Riverside, California; Brian Kingsfield, 54, of Costa Mesa, California; Tyler Paulson, 62, of Canyon Lake, California; Gary Kouletas, 47, of Hasbrouck Heights, New Jersey; and Scott Levine, 45, of Delray Beach, Florida.
GBEN was supposedly a health-and-wellness business, offering lifestyle products including the distribution of a ready-to-drink, hemp-infused cocktail called “Hemp Hazed.” According to the SEC complaint, in February 2019, Collins and Thomas obtained control of GBEN through a series of misleading transactions designed to conceal their control of the company and ownership of vast amounts of GBEN stock.
The statement said that according to court documents, from February 2014 to August 2020, the defendants conspired to defraud investors by issuing millions of shares to themselves at little to no cost, artificially controlling the price and volume of shares using manipulative trading techniques, and obfuscating the true sellers of stock, all while selling the stock at fraudulently inflated prices to unsuspecting victims in Ohio and throughout the country.
The court document stated that GBEN reported more than 77 million shares outstanding and a market capitalization of more than $40 million in June 2020. However, GBEN’s financial statements for the period ended March 31, 2020, showed that the company had total revenue of negative $2,116, a net loss of $66,384, and negative retained earnings of $2,046,473.
The Attorney General said in its statement that as part of the scheme, Levine used his position to facilitate the conspiracy’s ability to execute trades of GBEN shares between company insiders and investors solicited to buy blocks of free-trading stock. Kouletas and others operated PAG Group, which was used to enter into secret agreements with company insiders to sell free-trading stock on their behalf for a portion of the proceeds. Members of the conspiracy also knowingly made false statements and omissions when they solicited investors to purchase restricted GBEN stock, including concealing that the salesman’s compensation was up to 40% of the victim’s investment.
SEC does its part
Separately, in July 2023, the Securities and Exchange Commission instituted settled administrative and cease-and-desist proceedings against Damon Durante for unregistered broker activity for selling shares of Global Resource Energy, Inc. (OTC: GBEN), a Fort Worth-based microcap company. In a separate proceeding, The SEC also filed in the U.S. District Court for the Northern District of Texas, charging Collins, Thomas, Kouletas, Levine, and Kingsfield for their roles in a fraudulent scheme regarding GBEN.
As a result of the defendants’ combined fraudulent conduct, nearly 50 identified investors lost more than $2 million after purchasing worthless restricted and free-trading stock.
The Court determined each defendant’s sentence after a review of factors unique to each case and defendant, including the defendant’s prior criminal record, if any, the defendant’s role in the offenses, and the nature of the crimes. The defendants were sentenced to the following terms of imprisonment: Thomas Collins, 37 months; Patrick Thomas, 18 months; Hughe Duwayne Graham, 12 months and 1 day; Brian Kingsfield, 37 months; Gary Kouletas, 43 months; and Scott Levine, 18 months. The defendants were also ordered to pay restitution to the identified victim-investors. So far, the government has recovered over $400,000, which the Clerk of Court will distribute to victims for restitution.
The investigation was conducted by the Federal Bureau of Investigation, Cleveland Division. Assistant United States Attorney Alejandro A. Abreu prosecuted the cases.
