A former B.C. resident, who American officials alleged to be one of several leaders of a series of coordinated international pump-and-dump stock manipulation schemes, has pleaded guilty to conspiring to commit securities fraud in a New York court.
“For years, Ronald Bauer orchestrated a sprawling ‘pump-and-dump’ scheme involving the shares of numerous U.S.-based issuers that preyed on ordinary, retail investors. While Bauer and his co-conspirators lived outside of the United States, they took advantage of the U.S. markets to perpetrate their fraud and reaped millions upon millions in profits at the expense of the victims,” said U.S. Attorney Damian Williams on Nov. 4.
Bauer had been charged with multiple counts of criminal securities fraud; the one guilty plea now brings the prospect of up to five years in prison. In addition to any prison sentence, a money judgment of $4,377,228.74 was also entered against Bauer this week, said Williams.
This was not Bauer's first run-in with securities violations. In 2006, Bauer, then living in a luxury condo in Vancouver, was banned from directing companies for five years after settling with the U.S. Securities and Exchange Commission on allegations of market manipulation.
Three of Bauer’s alleged co-conspirators, including Canadian and British citizen Craig Auringer, remain under indictment for what the U.S. Attorney’s Office alleges to be a $75-million scheme.
Bauer and his co-conspirators, said Williams, sought to conceal their beneficial ownership of the shares of seven U.S. penny stock companies; Bauer did so by distributing shares to nominee entities that had been established by a Swiss corporation called Blacklight, S.A.
And once Bauer and his co-conspirators “effectively controlled or otherwise maintained significant influence over the management” of the companies they then launched “coordinated promotional campaigns” to lure retail investors to buy their artificially inflated shares via “coordinated trading.”
Bauer is still facing a civil lawsuit brought by the SEC for his part in what officials liken to a multi-faceted “international stock manipulation ring” — involving the sale of over $1 billion worth of shares in U.S. markets — with prominent connections to British Columbia.
Bauer’s criminal case proceedings tied to temporary stay against David Sidoo
The criminal case against Bauer led to a temporary stay of proceedings for the parallel civil case against him and seven other alleged co-conspirators, including former stockbroker David Sidoo.
On April 14, 2022, the SEC filed a civil complaint in the Southern District of New York against Sidoo, Bauer and six other men for allegedly orchestrating yet another complex, international stock manipulation scheme that generated at least $145 million in illicit profits.
Sidoo and Bauer were charged with fraud in the offer or sale of securities, fraud in the purchase or sale of securities, and unregistered offerings of securities for his alleged part in two “pump-and-dump” operations.
While Bauer operated many pump-and-dump “rings,” one of them, according to the SEC complaint, is the “Sidoo and Bauer coalition ring” that saw Sidoo-directed North American Oil and Gas Corp. generate US$15.23 million in illicit proceeds between July 2013 and August 2014 and Sidoo-directed American Helium Inc. generate US$1.45 million between March 2018 and February 2020.
In the case of American Helium, the company was registered and based in Vancouver, sold on the TSXV but also in New York’s “over-the-counter” market.
The SEC complaint outlines how Sidoo is alleged to have taken over the dormant B.C. public company, then known as Karoo Exploration Corp. in 2017.
As company director, Sidoo issued cheap shares (via private placements) of what became known as American Helium to the accounts of friends and associates, including Bauer-controlled entities, via an unnamed Vancouver brokerage firm, the SEC stated.
Sidoo then, according to the SEC, oversaw all of the promotional firms and entities used for the American Helium promotional campaign that “caused dramatic rises in demand” (and share price) for American Helium stock in early 2018.
Sidoo left the company upon being indicted for fraud in the U.S. college admissions scandal, for which he eventually pleaded guilty and served three months in a federal prison.
Bauer and Sidoo had been scheduled to respond to the civil securities fraud charges in November 2022.
But in October 2022, the U.S. Attorney’s Office filed a stay of proceedings in order to first clear up the criminal case against Bauer and his three other alleged co-conspirators.
“If this case were to proceed, there would be a risk of significant interference with the criminal case,” since “even a cursory examination of the indictment and the SEC complaint makes clear that the alleged wrongdoing is essentially the same,” Williams then stated.
The stay of civil proceedings against Sidoo and others will last until the completion of the criminal trial. Bauer’s alleged co-conspirators have not entered guilty pleas.
The SEC last provided the Southern District of New York federal court with an update on Oct. 4.
“Confidential settlement discussions remain ongoing between the SEC and certain of the Defendants in this case, while the parallel criminal case continues toward a trial in early 2025,” the SEC stated.
Bauer has been granted bond from his residence in the United Kingdom as U.S. officials do not consider him a flight risk. Bauer’s release conditions allow him to visit his father’s burial site in Ontario. His sentencing is scheduled for May 20, 2025.
Bauer rings associated to Hells Angel-linked scheme: DOJ and SEC
Another B.C. connection to Bauer’s indictment is the alleged pump-and-dump ring associated to the Hells Angels Motorcycle Club in B.C.
On April 14, 2022, the Federal Bureau of Investigation and U.S. Department of Justice criminally charged not only Bauer but also, in a separate indictment, Burnaby’s Courtney Vasseur, now 43, with multiple counts of criminal securities fraud, conspiracy to commit securities fraud, wire fraud, conspiracy to commit wire fraud and conspiracy to commit money laundering for their part in a set of alleged fraud schemes.
Vasseur is a full-patch member of the Hells Angels, according to the province’s anti-gang agency Combined Forces Special Enforcement Unit.
Also charged was B.C. resident Curtis William Lehner, who along with Vasseur, are fighting extradition to the U.S. in B.C. Supreme Court.
Vasseur's ring is alleged to have generated US$35 million in illicit proceeds alone.
Vasseur, dubbed "Arctic Shark" by associates, also allegedly worked with former Vancouver lawyer and offshore shell company facilitator Fred Sharp. Sharp also faces criminal fraud charges in a separate indictment.
A judge found Sharp to be the “mastermind” of the $1-billion network, having been found liable of securities fraud in civil proceedings on May 12, 2022.
Sharp has been ordered to pay disgorgement and prejudgment interest of US$28,934,433 and a civil penalty of US$23,990,781. Sharp is now barred from future trading in U.S. stocks.
