Toronto ex-broker fails to reverse 25-year U.S. fraud sentence
20/01/2015 16:53
By Jonathan Stempel
Jan 20 (Reuters) - A former Toronto stockbroker failed to
persuade a U.S. appeals court in Philadelphia to overturn his
fraud conviction and 25-year prison sentence for causing more
than $55 million of losses in an international stocks scam.
The 3rd U.S. Circuit Court of Appeals on Tuesday rejected
the defendant George Georgiou's argument that the trades in
question were not "domestic," having been processed for foreign
accounts and involved stocks not listed on major U.S. exchanges,
therefore excusing him from U.S. prosecution for fraud.
Scott Splittgerber, a lawyer for Georgiou, had no immediate
comment, saying he had yet to review the decision.
A federal jury in February 2010 convicted Georgiou, now 45,
of securities fraud, wire fraud and conspiracy over trades in
Avicena Group Inc, Hydrogen Hybrid Technologies Inc HYHY.PK ,
Neutron Enterprises Inc and Northern Ethanol Inc, which were
listed on the OTC Bulletin Board or Pink Sheets.
Prosecutors said Georgiou and others traded the stocks from
2004 to 2008 in accounts they controlled in Canada, the Bahamas
and the Turks and Caicos Islands, and artificially inflated
prices by creating a false appearance of an active market.
Georgiou was arrested in an FBI sting. He had been banned as
a broker in Canada in 1995.
In his appeal, Georgiou said Morrison v. National Australia
Bank Ltd, a June 2010 U.S. Supreme Court decision that limited
the use of U.S. securities laws to fight deceptive non-U.S.
conduct, justified reversing his fraud conviction.
While agreeing that the Bulletin Board and Pink Sheets were
not national securities exchanges, Circuit Judge Joseph
Greenaway wrote for the 3rd Circuit that Georgiou had conducted
"domestic" trades in all four stocks because he had incurred
"irrevocable liability" for them in the United States.
Greenaway said this was because the trades involved working
with U.S.-based market makers, or purchases or sales at
Georgiou's direction involving entities in the United States.
"We now hold that irrevocable liability establishes the
location of a securities transaction," Greenaway wrote. He said
three other federal appeals courts have used that standard.
Georgiou was in 2010 also sentenced to pay $55.8 million of
restitution. He is housed at a low-security facility in Milan,
Michigan, and eligible for release in December 2031.
The case is Georgiou v. U.S., 3rd U.S. Circuit Court of
Appeals, Nos 10-4774, 11-4587, 12-2077.
(Reporting by Jonathan Stempel in New York; editing by Gunna
Dickson)
((jon.stempel@thomsonreuters.com;)(646 223-6317; Reuters
Messaging: jon.stempel.thomsonreuters.com@reuters.net))
Keywords: GEORGIOU FRAUD/