Abbotsford man gets 5-year trading ban, ordered to pay $35K for stock fraud

Abbotsford man gets 5-year trading ban, ordered to pay $35K for stock fraud

Robert Logan Dunn is one of 3 B.C. men implicated in 2012 pump-and-dump scheme

Robert Logan Dunn. Facebook photo.

An Abbotsford man has been punished by provincial regulators for manipulating the stock market in a “fraudulent” scheme to artificially raise the share price of a B.C company.

On March 12, Robert Logan Dunn, president and director of the now-defunct Mosaic Holdings Inc., reached a settlement of $35,000 with the British Columbia Securities Commission (BCSC) for his role in the scheme, which dates back to 2012. He also received a five-year ban on numerous financial-trading activities.

He is one of three B.C. men implicated in the scheme by the BCSC.

Dunn admitted in the settlement that he paid over $72,000 US to a stock promoter to hype Forum National Investments Ltd., a B.C. company he had a large amount of shares in. A BCSC notice says Dunn and his company’s actions were an “inadvertent and unintentional breach of the Securities Act.”

But court filings by the U.S. Securities and Exchange Commission (SEC), show Dunn’s role in the scheme was far from unintentional through his close association with Forum National Investments and its CEO, Daniel Clozza.

“[The fraud] was highly profitable for Clozza’s relatives and associates—who collectively sold more than one million shares of Forum stock during this period, including Dunn who sold 159,575 shares for proceeds of $148,036.38,” the SEC said.

The BCSC are taking Clozza and Forum National Investments to court in April 2020 for their alleged actions, including claiming they allegedly “issued false or misleading” press releases, and lied in a sworn affidavit about their connections to the promoter.

Dunn and Clozza and two U.S. associates have been sanctioned by the SEC. Dunn reached a settlement of $20,000 US and received a lifetime ban on trading, issuing, inducing or attempting to induce the purchase or sale of any penny stocks.

It was a two-fold scheme, SEC documents reveal

The scheme had a two-fold approach: a public relations campaign and an internet stock promotion, which violated a number of U.S. anti-fraud provisions, according to the SEC.

Beginning in May 2012, Clozza and Dunn hired a promoter to disseminate misinformation and internet newsletters on the imaginary investment prospects of Forum National Investments, SEC documents detail.

These reports, which started in May 2012, falsely claimed there were millions invested or about to be invested, and created fictitious identities and statements from market sponsors to back up those claims on website domains owned by the promoter, according to the SEC.

“[When the promoter] told Dunn the materials for the internet stock promotion would need to identify the person or entity that was paying for it. Dunn told [the promoter] to just make something up,” the SEC said. “In response, [the promoter] suggested the name “Welsson Financial Media” – an entirely fictitious entity – which Dunn approved.”

Coinciding with the internet stock promotion, and at the direction of Clozza, Forum National Investments sent out “a barrage” of press releases which parroted the promoter’s lies about their investors, the SEC said.

A U.S. Securities and Exchange Commission chart showing the success of Forum National Investments campaign in raising their stock value.

Clozza’s company was, in fact, “experiencing significant financial difficulties,” the SEC said. The business was encumbered by a $5 million loan for a 170-foot-luxury yacht it owned, was $25 million in debt, only had $60,000 in cash and reported an annual revenue of $262,582.

During the height of the manipulation, between April and late June, 2012, the value of Forum National Investments’ stock rose to a peak of $2.18 per share, with a total of 400,000 shares traded on seven different days. This was up from price of only $0.15 per share in January, where the stock was only traded twice – totalling 13,510 shares.

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