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US securities investigators target Canadian hacking operation

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News Tech: Two British Columbian families are accused of scamming American retail investors in a conspiracy that reached as far as the Bahamas and Switzerland from Metro Vancouver.

The civil action alleges that two microcap (penny stock) companies, Lotus Bio-Technology Development Corp. and Good Gaming Inc., were used as fronts to deceive American investors.

The commission has named thirteen individuals and five corporate entities as defendants. They are charged with purchasing substantial quantities of stock in the companies, publically endorsing them, and preparing to hack into brokerage accounts to purchase shares in the companies while simultaneously selling their own.

The defendant companies Harmony Ridge Corp. and Maximum Ventures Holdings Ltd. (Wyoming) were purportedly under the control of the Tangs (Nevada).

The Tangs then addressed Davies Wong, 62, of Vancouver and his daughter Breanne, 33. She holds a Canadian securities licence that she has held since 2011 and has worked as a broker there. She has resided in Panama and Vancouver. The Wongs held control over 680220 BC Ltd., a privately held Canadian firm that traded the stock, after receiving Lotus shares from Harmony and Maximum.

The Wongs allegedly used accounts in the Bahamas, Belize, the United Kingdom, and Switzerland, notably Silverton S.A., a Swiss asset management firm, to conceal their beneficial ownership of Lotus, according to the commission. According to the commission, Vancouver-based Frederick Sharp, a former lawyer who now works as a facilitator of offshore shell firms, was a significant figure in an alleged global stock fraud involving Silverton S.A. Sharp was convicted of securities fraud in a default judgement, and as a result, Sharp is the subject of civil forfeiture proceedings in British Columbia. A federal court judge in Massachusetts found Silverton guilty of fraud in a separate civil case in June. The commission alleges that tens of millions of Lotus shares were transferred between these business entities before they were bought at inflated rates by common investors. According to the commission, the Wongs were the “principal sellers” while Richard Tang oversaw marketing initiatives. The use of POP Holdings Ltd. from the Dominican Republic and H.E. Capital S.A. from Nevis, according to the commission, was crucial to the scheme.

These two shells were jointly owned by British nationals Christopher R. Smith, 52, and his father Richard Smith, 78, who both resided in the Dominican Republic. Rahim Mohamed, a 45-year-old Canadian who resides in Calgary and the Cayman Islands and is believed to be the mastermind behind the hacks, was paid using these shells.

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