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NEW YORK A trader who touted the stock of
ForceField Energy Inc on television while being paid
kickbacks to endorse the LED lighting provider pleaded guilty on
Monday to a conspiracy charge, related to a fraud that cost
investors $131 million, federal prosecutors said.
Herschel Knippa, the owner and head trader at Kenai Capital
Management LLC in Dallas, admitted to conspiring to commit
securities fraud, in a hearing before U.S. Magistrate Judge
Ramon Reyes in Brooklyn.
Prosecutors accused Knippa, 46, of touting the
now-essentially worthless ForceField stock on television without
revealing his receipt of kickbacks.
They also said that during a July 2014 appearance on Fox
Business Network’s “Varney & Co,” Knippa lied to host Stuart
Varney when asked if he owned ForceField by responding: “You bet
I do. I put my money where my mouth is.”
According to court papers, Knippa solicited more than $1.19
million in ForceField private placements from at least 10
investors, and with other conspirators tried to hide the scheme
by using disposable cellphones and using cash for kickbacks.
“Mr. Knippa has accepted responsibility for violating the
securities law,” his lawyer Alex Spiro said in an email.
The defendant faces up to five years in prison. Fox Business
and Varney were not accused of wrongdoing.
Knippa was one of nine defendants, including stock
promoters, brokers and investor relations officials, accused
last May of defrauding investors into buying ForceField.
That followed the April 2015 arrest of Richard St. Julien, a
Canadian citizen who was ForceField’s executive chairman, on
charges he schemed to inflate the stock price of his company,
once called SunSi Energies Inc.
Authorities said the defendants manipulated ForceField stock
from 2009 to April 2015 by secretly trading it in undisclosed
accounts, inflating trading volume, and concealing kickbacks.
At least seven defendants have entered guilty pleas, court
records show. The case against St. Julien is pending, the
ForceField shares last traded on Thursday, at 1/10,000th of
a cent, Reuters data show.
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