Turncoat Testifies in Federal ‘Penny Stock’ Fraud Trial

A Brooklyn native who pleaded guilty to securities fraud took the stand Thursday at Brooklyn Federal Court, breaking down a penny stock scheme he has admitted to being a part of for years.

Mohammad Dolah testified as part of a plea agreement with government prosecutors to describe the scheme allegedly headed by Sandy Winnick, Joseph Manfredonia and others that would create fake press releases, bribe brokers to purchase stocks and manufacture false documents. This would give speculators the notion that the stocks they were buying from companies listed by these men were legitimate, and trick them into buying shares which were then dumped to make money, said prosecutors.

“We’d promote his companies that had no real assets and we’d sell what we could on the market to make cash,” said Dolah who pleaded guilty for his part in the scheme two years ago. He also testified about how the stocks were handled and who played what part in the orchestration of this plan.

“The goal of these companies was for me, William Seals, Sandy Winnick, Gary Kershner and others to sell our stock,” said Dolah. At times, he looked amused when explaining how far he and his bosses went to cover up their tracks and was nonchalant about why committed the crimes in the first place.

Dolah even admitted that he used as an alias the name of real lawyer in Panama named Abdeil Vergara and manipulated him into giving him personal information to open certain accounts in his name, and shift blame away from himself or others involved in the crimes.

“We set up different company names offshore to hide our identities and forged other documents and signatures,” he added.

Other witnesses called today included FBI special agent Dangler who was questioned closely by the defense implying that he intentionally overlooked exhibits that they provided, and that he did not know about some documents he allegedly obtained from subpoenas in the case.

Two alleged victims also testified, including one who said he lost over $4,000 after purchasing thousands of shares over a six-month span from June to December, 2009. The stock price dropped from $0.68 a share to less than a penny a share over this time, but he still bought shares due to the false press releases and data he saw on the company website created by Winnick and his partner known as Ranearth Inc. that was posted on E-Trade

“I look at the history of the stock, and if I see a lot of CEO’s and others purchasing stock, it’s a good sign but if insiders are dumping stock I’d tend to stay away from it,” said David Carlin, one of the witnesses.

He finished by saying, “ I wouldn’t invest if I’d known it wasn’t a real company.”