by Steven Ertelt
April 28, 2006
Salt Lake City, UT (LifeNews.com) — Three men who ran a bogus embryonic stem cell research company in Utah that defrauded people around the world of millions of dollars have been arrested. The company never performed any research and was a shell to sell bogus stock to people worldwide.
The men who operated the fraudulent company stand accused of bilking investors of $6.6 million in what a federal grand jury says was a scan to sell stock to global investors.
Allen Z. Wolfson, his son David M. Wolfson, and Michael S. Newman, were indicted by a grand jury on Wednesday, according to the Salt Lake City Tribune. There were charged with nine counts of wire fraud in their scheme to prey on people hoping to for miracle cures from the disputed research.
According to the Tribune, the men established the company Stem Genetics and registered it in Salt Lake City. It claimed to be conducting embryonic stem cell research and the three men sold stock in the company from October 2002 through August 2003.
They supposedly targeted overseas investors in places like Britain, Australia and New Zealand in order to avoid having to register in the United States, according to the indictment, which was filed in the U.S. District Court in Salt Lake City.
The Tribune reports that the men charged artificially high prices for the stock, but told investors that it would soon appear on the NASDAQ stock exchange for $7 a share, about 20 percent more than the investors were paying for the phony stock issues.
Melodie Rydalch, a spokeswoman for the U.S. Attorney’s Office in Salt Lake City, told the newspaper that federal officials have recovered about $1.5 million of the $6.6 million the trio took from more than 600 investors.
Allen Wolfson is awaiting sentencing in New York on other financial fraud issues, and Newman is believed to be in Los Angles charged with other financial fraud as well.
If convicted, the men could face as much as 30 years in prison.