Federal authorities arrested 14 people on Wednesday, including the head of Santa Monica-based Calbridge Capital, LLC, for allegedly manipulating stock prices and causing thousands of investors to lose more than $30 million.
Grover Henry Colin Nix IV is named along with more than a dozen others from across Los Angeles and California in two federal indictments that were unsealed this week.
Among other charges, the 39-year-old Los Feliz resident, who goes by the name Colin Nix, is accused of leading what prosecutors described as a broad scheme to manipulate stock prices. Prosecutors said he and more than a dozen others perpetrated a scheme to falsely inflate the prices and trading volumes of stocks and then sell millions of shares to the public.
The indictment unsealed Wednesday alleges that the scheme involved a number of companies, but focuses on deals involving two businesses—GenMed, which purported to develop, manufacture and distribute generic pharmaceuticals; and Biostem, which purported to develop and license regenerative stem cell treatments, including hair re-growth technology.
The indictment further alleges that Nix and others engaged in money laundering, using funds transferred from offshore accounts to promote the scheme.
Actor Eric Roberts was hired as a spokesman for GenMed in a 2011 video press release.
"The defendants' alleged combination of celebrities, press releases, gimmicks and lies was similar to how a magician deceives unsuspecting believers into an illusion," said Bill Lewis, assistant director in charge of the FBI's Los Angeles field office. "While operating the schemes alleged in the indictments, the defendants kept their audience captive until stock prices peaked, while investor money vanished into defendants bank accounts.''
If convicted, Nix faces a possible life sentence.
The FBI and IRS intercepted more than 60,000 phone calls and 24,000 text messages in their investigation.
Attorneys representing several defendants could not be reached for comment.
— City News Service and Venice Patch editor David Carini contributed to this report.