LA Company Raised Millions In Stock-Newsletter Bribery Scheme: DOJ
LOS ANGELES, CA — The former CEO of a Beverly Hills company is among three people accused in an scheme where a financial newsletter hawked over-the-counter stocks — raising tens of millions for the companies in question — in exchange for bribes, according to court documents.
Federal prosecutors filed charges Monday in U.S. District Court in Los Angeles against three people, according to the U.S. Attorney’s Office:
All three defendants were charged with one court of conspiracy to tout securities for undisclosed compensation. Mikula was also charged with one count of touting securities for undisclosed compensation, according to prosecutors.
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As part of the scheme, companies seeking investment through over-the-counter stocks would pay off Mikula in exchange for him writing favorable articles about the company in the newsletter, prosecutors said.
Prosecutors say the scheme paid off big: One company, Emerald Health Pharmaceuticals, raised $60 million over the course of a year, including $32.5 million raised through the newsletter’s promotion of the company, according to court documents.
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In March 2020, Mikula wrote an article titled “Curing Incurable Diseases and Giving Us Over 4,900% Potential Gains” that touted the company. The newsletter falsely stated that it had not received compensation for the article, even though negotiations were underway between the company, Beri, Mikula and Fernandez toward concealed payments in exchange for the article, according to prosecutors.
Fernandez is accused of operating foreign and shell companies and bank accounts to conceal the nature of the bribes and kickback. In exchange for his services, Fernandez took as much as a 50-percent cut of the kickbacks, prosecutors said.
In total, Mikula, Fernandez, Beri and others received more than $4.2 million in undisclosed and misrepresented payments, as well as hundreds of thousands in undisclosed entertainment, prosecutors said.
The court complaint lists several coconspirators, including one named person — Avtar Singh Dhillon, 62, of Long Beach, a one-time board member of and an indirect shareholder in EHP. Dhillon pleaded guilty in December 2022 in federal court in Massachusetts and admitted his role in the conspiracy. He’s due for sentencing May 23 in Boston, prosecutors said.
Other unnamed conspirators live in Beverly Hills and Venice and companies based in Venice and Truckee are among those said to have benefited from the scheme, according to court documents.
The unnamed Venice-based company raised $6 million with the help of the newsletter, according to court documents.
The conspiracy charge carries a statutory maximum sentence of five years in federal prison. The securities touting charge also carries a statutory maximum sentence of five years in federal prison.
The U.S. Securities and Exchange Commission has also charged the defendants in a separate civil enforcement action.
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