Five defendants accused in a $144 million pump-and-dump operation are urging the First Circuit to wipe out a $42M Disgorgement Stock Scheme order, arguing the penalty rests on unreliable records created by the scheme’s fugitive mastermind.
The defendants—Paul Sexton, Mike Veldhuis, Courtney Kelln, Zhiving Yvonne Gasarch, and Jackson Friesen—claim a Massachusetts federal judge wrongly held them jointly responsible for nearly a third of the alleged haul without proof they ever saw the money.
Fugitive Mastermind at the Center
The group points the finger at Frederick Sharp, a Canadian accused of orchestrating the international penny stock scam. Sharp, now a fugitive, allegedly controlled all the cash flow, while keeping ledgers in a shadowy payment system called the “Q system.”
Defense lawyers say the Q system amounted to nothing more than “page after page of gibberish,” maintained by Sharp and an IT consultant. “What we know from the trial is the money accrued to Fred Sharp … a fugitive and a crook,” said Maranda Fritz, attorney for Friesen.
