A California couple was indicted by a federal grand jury Thursday on charges they profited on investors’ demand for Internet stocks by creating shell companies, selling unregistered securities and falsely touting their performance to potential investors, according to a recent story by the Associated Press (AP). VirtualLender.com, a purported online mortgage broker, is among the companies whose shares of stock were involved.
Federal prosecutors reportedly claim Thomas Eck and Zahra Gilak made as much as $15 million, and defrauded investors of $100 million, from the methodically planned venture that included fraud on nearly every aspect of stock sales for shell companies between February 1999 and January 2001.
According to AP, the SEC has sued the couple and several others involved in the alleged fraud because, it said, they sold millions of dollars in unregistered stock and reported some of the gains as revenue for non-existing operations with the assistance Scott Kelly of Chandler, Arizona and Salvatore Censoprano, of Foster City, Calif. Those two men were listed respectively as the former president and chief financial officer of the sham companies.
The AP story went on to say that Eck and Gilak were arrested Thursday. Gilak was arrested by FBI agents at her home in Pengrove, California, and her husband, Eck, turned himself in to authorities hours later.
