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Two Indians charged with wire fraud in US; may face 20 years in prison

Sandip Shah and Shailesh Shah are residents of California and were arrested in February this year.

Fraud1 Sandip Shah, 40, and Shailesh Shah, 47, were charged with wire fraud.

Two Indians have been charged for their involvement in a microcap stock kickback scheme and may face up to 20 years in prison if convicted.

Sandip Shah, 40, was charged in an indictment with nine counts of wire fraud and Shailesh Shah, 47, was charged with two counts of mail fraud and two counts of wire fraud.

Both are residents of California and were arrested in February this year.

The two face a statutory maximum penalty of 20 years in prison each followed by three years of supervised release and a fine of USD 250,000.

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According to the charging documents, Sandip Shah was in the business of promoting penny stocks and assisting public companies in finding sources of funding.

Shailesh Shah, president and chief executive officer of two publicly traded companies, agreed to pay secret kickbacks to an investment fund representative in exchange for having the investment fund buy stock in his companies.

The kickbacks were concealed through the use of sham consulting agreements and other fraudulent documents.

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Sandip Shah agreed to introduce the investment fund representative to executives of publicly traded companies so that those executives could enter into the kickback arrangement.

In exchange for the introductions and for facilitating the kickback arrangements as they continued, he accepted a portion of the kickbacks paid by the executives.

However, the two were unaware that the purported investment fund representative was an undercover agent.

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Microcap companies are small publicly traded companies whose stock often trades at pennies per share.

First published on: 13-05-2014 at 11:09:44 am
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