A Minnesota home contractor was sentenced to a year and one day in federal prison Thursday for a brazen scheme to hijack dormant publicly traded shell companies and then pump and dump their stocks to unwitting buyers.
The contractor, 45-year-old Mark Miller, is the last of three men to be sentenced for the securities fraud scheme, which became public through an indictment filed in June 2021 in U.S. District Court in Minnesota.
Miller’s lawyer asked Judge David Doty to sentence Miller to probation, citing his contracting business —which the Breezy Point man runs with his wife — the fact they have teenage children and what he called a disparity in the punishment of probation meted out to one of his co-defendants.
“He’s a family man and a hard worker,” said the defense attorney, Robert Lengeling, of Miller, who has been awaiting sentencing since he pleaded guilty in October 2021.
“It would be an injustice to pluck him out of the community.”
Lengeling told Doty it “felt like we got punched in the gut, quite frankly” when he recently learned prosecutors were asking Miller spend a year in prison for the penny stock scheme. “It was a bit of a surprise.”
“My client is here today incredibly fearful of what he will do with his business,” said the lawyer.
The one-year sentence, recommended by prosecutors, was markedly lower than the sentence of 30 to 37 months suggested by federal sentencing guidelines for the charge of conspiracy to commit securities fraud.
“Mr. Miller committed a serious crime,” assistant U.S. Attorney Melinda Williams told the judge.
“I’m not hearing a lot of remorse,” the prosecutor added.
In addition to his prison term, which Miller is expected to start serving in August, Doty sentenced Miller to two years of supervised release after he completes his time locked up.
In giving Miller a day in prison beyond a full year, the judge was granting the defendant a sort of break. Under federal rules, any defendant who is sentenced to more than a year in prison is eligible to be released after 85% of their term is served. People who get a year or less in jail are not eligible for early release.
Miller also faces a demand for “more money” from the U.S. Securities and Exchange Commission, which has a pending civil complaint against him in connection with the scheme, Lengeling told the judge.
Prosecutors as part of a plea agreement with Miller dropped multiple counts of securities fraud and wire fraud he had been originally charged with.
Miller, along with his co-defendants Christopher James Rajkaran and Saeid Jaberian, from 2017 through 2019, used bogus resignation letters purportedly written by the officers of multiple shell companies to seize control of at least four firms.
The companies, which had no meaningful business, also failed to make required regulatory filings for some time.
The conspirators then used the SEC’s EDGAR public filing system and fake press releases to fraudulently inflate the share prices of the hijacked companies by claiming new business opportunities, prosecutors said. Miller and Jaberian, as well as an unidentified person related to Miller, became the nominal CEOs and presidents of the targeted companies, prosecutors said.
The defendants, who had purchased many of the stocks for less than 1 cent per share, then sold them on the over-the-counter market for many times more than what they paid for them. Prosecutors said the men earned hundreds of thousands of dollars in profits from the scheme.
At the time he was criminally charged, Miller was involved in an effort to seize control of a Florida penny-stock company, New World Gold Corp.
That company had not been identified as one of the seven shell-company targets in either the criminal case or a civil lawsuit against Miller filed by the SEC.
Miller voluntarily dropped a suit related to efforts to take over New World Gold soon after CNBC reported his involvement with that company.
Rajkaran, a resident of Queens, New York, and Guyana, pleaded guilty in the case in 2021. He was sentenced in January 2022 to 18 months in prison. After his release, he was arrested last November and charged with gross misdemeanor driving while intoxicated, according to a federal court filing in April.
Jaberian, also a Minnesota resident, was on track to go to trial in his criminal case until last November, when he pleaded guilty. Doty sentenced him on May 10 to two years of probation.
During his sentencing Thursday, Miller’s lawyer told the judge, “My client has great concerns about how much we will talk about this case,” referring to his criminal prosecution.
Noting a CNBC reporter was monitoring the hearing via Zoom, Lengeling said, “There’s at least one media outlet that has taken great interest in Mr. Miller’s case.”
“For some reason, this has been a salacious type of case for this particular media person and I’m not sure why,” Lengeling added.
“Mr. Miller has made a mistake and has made amends,” Lengeling said.
The lawyer ended the hearing by asking Doty to seal the transcript of the proceeding for a decade. Doty did not immediately rule on that request.