Man sentenced to 25 years in stock fraud case

A Canadian man was sentenced Friday to 25 years in prison for his role in a stock-fraud conspiracy that prosecutors say resulted in more than $55 million in losses earlier in this decade.

George Georgiou, 40, was convicted in February of manipulating stocks of four publicly traded companies, including one that was trying to build an ethanol plant and another that was conducting research into Lou Gehrig's disease.

He was also convicted of causing the collapse of a financial-management firm in the Bahamas.

The sentence handed down by U.S. District Court Judge Robert F. Kelly, was less than the 30 years the Philadelphia U.S. Attorney's Office had sought.

First Assistant U.S. Attorney Louis D. Lappen and Assistant U.S. Attorney Derek A. Cohen had pressed for the lengthier sentence, in part because they contended that Georgiou committed perjury during his testimony at the nearly three-week-long trial. The jury took less than 90 minutes to return a guilty verdict, the prosecutors noted.

The chief witness against Georgiou was Kevin Waltzer, a Bucks County man who had masterminded a separate $44 million fraud. Waltzer, a business associate of Georgiou's, became a government informant when federal investigators closed in on him. Waltzer pleaded guilty in February and was sentenced to 11 years in prison.

Georgiou, who immigrated from Cyprus when he was a child, used offshore brokerage accounts in the Bahamas, Turks and Caicos, and Canada for the stock fraud. By trading the stocks among participants in the fraud, he was able to artificially inflate prices.

The inflated stocks were used as collateral to fraudulently obtain millions in loans from three Bahamian brokerage firms, prosecutors said. When the stocks crashed, the brokerage firms were left with worthless securities. One of the firms, Caledonia, was forced to liquidate, resulting in $22 million in losses. Many of its clients lost their retirement savings as a result.

Georgiou was a registered investment professional in Canada until 1995, when he was banned from acting as a broker.

The four stocks he manipulated were publicly traded on the Pink Over-the-Counter Markets and the OTC Bulletin Board. The stocks were from Neutron Inc., Avicena Group, Hydrogen Hybrid Technologies, and Northern Ethanol.