The United States Department of Justice (DoJ) has indicted Beaufort Securities and two members of its staff on charges of US securities fraud and international money laundering following an undercover sting operation. The DoJ has just revealed an indictment it unsealed yesterday against Beaufort Securities, Beaufort Management Services alongside several other individuals and companies on charges including conspiracy to commit securities fraud and money laundering conspiracy. The companies and individuals are also accused of working to launder the proceeds through offshore bank accounts and the art work, including the proposed purchase of a Picasso painting.
According to the DoJ, between March 2014 and February 2018 Beaufort Securities, Beaufort Management, and managers Panayiotis Kyriacou and Arvinsingh Canaye collectively the “Beaufort Defendants,” engaged in a scheme to defraud investors and potential investors in various U.S. publicly traded companies.
They are accused of concealing the true ownership of various U.S. publicly traded companies and manipulating the price and trading volume in the stocks of those companies.
In October 2016, an Undercover Agent contacted Kyriacou and stated that he was interested in opening brokerage accounts at Beaufort Securities from which he could execute trades in several multi-million dollar stock manipulation deals.
According to the indictment, the Beaufort Defendants opened brokerage accounts for their clients in the names of offshore shell companies with nominee shareholders and directors, and then conducted manipulative trading of stocks of U.S. publicly traded companies listed on U.S. over-the-counter exchanges. Beaufort Securities is then said to have facilitated at least ten “pump and dump” schemes involving U.S. publicly traded stocks, generating over $50 million in proceeds for its clients.
Notably, Beaufort Securities had affirmed to the Financial Conduct Authority in July 2016 that it had taken remedial measures to correct deficiencies in the firm’s financial crime controls and anti-money laundering processes.
Furthermore, between October 2017 and February 2018, Kyriacou, Aristos Aristodemou, the uncle of Kyriacou; and Matthew Green, the owner of an art gallery in London, United Kingdom, together with their co-conspirators, are said to have agreed to launder £6.7 million, the equivalent of over $9 million dollars, which the undercover agent represented to be the proceeds of securities fraud.
Aristodemou allegedly said the art business was the “only market that is unregulated,” and that art was a profitable investment because of “money laundering.” The defendants are said to have proposed that the undercover agent could purchase from Green a painting by Pablo Picasso entitled “Personnages, Painted 11 April 1965,” and provided paperwork for the painting’s purchase. The money laundering scheme was halted prior to the transfer of ownership of the painting.
Arvinsingh Canaye, a general manager at Beaufort Management Services, was arrested yesterday and is scheduled to be arraigned this afternoon before a United States Magistrate Judge in Brooklyn.
‘As alleged in the indictment, the defendants engaged in an elaborate multi-year scheme to defraud the investing public of millions of dollars through deceit and manipulative stock trading’ said United States attorney Richard P. Donoghue.
‘As alleged, in a series of unscrupulous and illegal trading practices, the defendants contrived a scheme to defraud investors of U.S. publicly traded companies by manipulating stock prices and masking the true ownership of their clients’ financial interests,’ said William F. Sweeney, Jr., assistant director-in-charge, Federal Bureau of Investigation.
‘In order to discreetly receive their illegal proceeds, the defendants focused their efforts on laundering the money through a variety of means, including the art world, which they believed was a market free from direct regulation,
Bringing to justice securities fraudsters and money laundering facilitators who engage in these types of schemes is and will remain a priority for the FBI and our law enforcement partners worldwide.’
This morning, the FCA announced that Beaufort and its sister firm Beaufort Asset Clearing Services have been declared insolvent. In a separate announcement, the FCA said it is assisting the US DoJ with its investigation.