(Statewide) – Acting United States Attorney Nicholas Vassallo announced today that two men were sentenced to prison after being convicted of fraud and identity theft crimes arising from a securities fraud involving NuTech Energy Resources Inc, according to a release issued by the Department of Justice.
The sentencing hearing took place on August 22, 2022, before United States District Court Judge Alan B. Johnson.
Justin Herman, age 51, of Canonsburg, Pennsylvania, was sentenced to serve a total of 87 months in prison with three years of supervised release and was further ordered to pay a $700 special assessment and $158,878.86 in restitution.
Charles Winter Jr., age 61, of Bradenton, Florida, was sentenced to serve a total of 54 months in prison with three years of supervised release and was ordered to pay a $500 special assessment and $158,878.86 in restitution.
Herman and Winters were convicted by a jury of conspiracy, securities fraud, and aggravated identity theft on October 8, 2021, following a 3-week trial in the United States District Court for the District of Wyoming.
According to court documents and evidence presented at trial, Herman and Winters conspired to “pump and dump” the common stock of NuTech Energy Resources.
A “pump and dump” is a form of securities fraud where the conspirators manipulate demand for a stock and the stock’s price, and then sell their worthless shares of the stock to the public at the artificially high price.
In this case, the conspirators bought control of a publicly traded shell company called EcoEmissions Solutions Inc. in January 2015 and changed the company’s name to NuTech Energy Resources.
The company’s stock then was sold under the ticker symbol NERG. The conspirators released information online to portray NuTech as a company located in Gillette, that was operating gas wells using a patented technology.
In reality, NuTech had no business, no revenue, and no paid employees in Wyoming or elsewhere. Herman and Winters used altered, backdated and forged documents to acquire 13 billion free-trading shares of NuTech common stock.
Herman, Winters, and their co-conspirators then artificially inflated the market price of NuTech common stock by manipulative trading and by releasing to the public false and misleading information about NuTech’s stock and business.
The false promotional information included a website, press releases, and emails containing misleading information about the company. When the market price increased based on this false information, the conspirators sold their worthless NuTech shares to innocent investors in the public market, including investors in the United States and other countries.
This fraud caused over $1.5 million in aggregate losses to investors.
Co-defendant Robert “Bob” Mitchell was charged with Herman and Winters. Mitchell pled guilty to mail fraud and conspiracy to commit securities fraud and was sentenced in October 2021 to 65 months in prison for his role in the NuTech fraud and a related investment fraud.
Florida attorney Ian Horn was charged and tried with Herman and Winters. Horn was acquitted of fraud crimes but convicted of perjury for making a material false statement while testifying before the grand jury investigating the NuTech fraud.
In January 2022, Horn was sentenced to two years’ probation with six months’ home confinement and fined $5,000.
“The convictions and sentences imposed on the defendants are the result of a six-and-a-half-year investigation and prosecution, involving multiple federal law enforcement agencies, that showed these defendants defrauded investors in Wyoming and around the world,” said Acting United States Attorney Nicholas Vassallo.
“Our securities laws are designed to give investors the truthful disclosures they need and deserve to make their individual investment decisions. These sentences send a clear message that defrauding investors and undermining faith in our Nation’s securities markets by manipulating markets and disseminating false information about a stock will be investigated thoroughly and punished severely.”
“The sentences imposed on defendants Herman and Winters serve as a fitting capstone to a lengthy investigation and prosecution of a complex scheme,” said Ruth Mendonça, Inspector in Charge of the Denver Division of the U.S. Postal Inspection Service, which includes Wyoming.
“We hope that anyone who considers using the U.S. Mail to further their criminal schemes looks to this case as an example of the effort the U.S. Postal Inspection Service will devote to protecting the U.S. Mail. Together with the Department of Justice and our federal, state, and local law enforcement partners, we will bring cases worthy of lengthy federal prison sentences,” said INC Mendonça.
Ron Gonzales, Special Agent in Charge for the Interior Department Office of Inspector General’s Energy Investigations Unit stated, “The convictions resulting from this joint investigation are an excellent example of multiple federal law enforcement agencies working with the Department of Justice, collaboratively and effectively, to ensure that individuals who victimize private citizens and government programs are held accountable for their illegal conduct.”
This case was investigated by the U.S. Postal Inspection Service and the U.S. Department of Interior’s Office of Inspector General. Assistant United States Attorney Eric Heimann and former Assistant United States Attorney Thomas Szott prosecuted the defendants.
The Criminal Prosecution Assistance Group of the Financial Industry Regulatory Authority (FINRA) provided invaluable assistance in the investigation and prosecution.