Home > Law Enforcement > Five Charged in Offering Fraud, Stock Manipulation, Ranging from Oil to Pot

Five Charged in Offering Fraud, Stock Manipulation, Ranging from Oil to Pot

Prosecutors say the defendants unwittingly conspired with an undercover agent who was posting as a corrupt stock promoter.

By Michael Katz


Five people have been charged in federal court for their involvement in two securities fraud schemes. According to prosecutors, the schemes involved an offering fraud of a Texas-based oil and gas company and the attempted manipulation of a cannabis company’s publicly traded stock.

An indictment was filed in the Eastern District of New York against Richard Dale Sterritt Jr., Michael Greer, Robert Magness, Mark Ross, and Robyn Straza charging them with conspiracy to commit securities fraud, wire fraud, and money laundering, among other offenses. 

“Through a web of related schemes, Sterritt and his co-defendants allegedly stole millions of dollars from investors, attempted to manipulate a publicly traded stock and laundered the proceeds of their crimes through the purchase of luxury items like a Bentley,” Mark Lesko, acting US attorney for the Eastern District of New York, said in a statement.

According to the indictment, over nearly three years, Sterritt, Greer, Magness, and Ross allegedly committed a series of schemes that included an offering fraud in oil and gas exploration production company Zona Energy securities and a plan to manipulate the price and trading volume of shares of OrgHarvest Inc., which produces, cultivates, and extracts organic cannabis products.

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The indictment said Sterritt lured investors in Zona Energy using the alias “Richard Richman.” It also accused Sterritt and his co-conspirators of making material misrepresentations about Zona Energy’s business, management, and the use of proceeds from the share offering. 

Of the more than $16 million raised from Zona Energy investors in the offering, Sterritt and his associates allegedly misappropriated more than $10 million to purchase luxury items, pay personal expenses, or funnel funds into other businesses Sterritt controlled.

As part of the alleged OrgHarvest market manipulation, Sterritt, Magness, and Ross are accused of engaging in matched trading to artificially inflate the price of OrgHarvest shares in order to raise revenue and conceal the misappropriation from Zona Energy. 

But the indictment says the defendants coordinated the OrgHarvest trades with an undercover law enforcement agent posing as a corrupt stock promoter. They believed the undercover agent controlled a team of corrupt brokers who would buy the artificially inflated OrgHarvest stock in their customers’ accounts.

Sterritt, who the indictment says secretly controlled the majority of OrgHarvest shares through trusts in the name of his girlfriends, family members, and co-conspirators, agreed with the undercover agent to place matched trades at specific prices, volumes, and times to prop up the stock price.

Sterritt, Greer, Ross, and Straza also allegedly laundered investor money from the sale of Zona Energy shares between bank accounts controlled by Sterritt, Greer, and Straza. 

In some cases, investor funds were allegedly wired between bank accounts for multiple different entities in the name of Greer and/or Straza or their entities. The ill-gotten funds were allegedly used for personal expenses, luxury goods, plastic surgery, and to provide cash to Sterritt’s family, friends, girlfriends, and co-conspirators.

If convicted of securities fraud or money laundering, the five face up to 20 years in prison.

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Home > News > Market Moves > Here’s Why Inflation Isn’t a Threat: Money Velocity
Market Moves

Here’s Why Inflation Isn’t a Threat: Money Velocity

Yes, the dollar supply has swollen, but folks just aren’t spending that much, Natixis says.
By Larry Light


So how bad is the inflation threat, anyway? Washington, in the form of the Biden administration and the Federal Reserve, has pumped trillions into the economy. As a result, some fear that the long, low-lying inflation rate is due for a big-time escalation.

Not so fast, says Joseph Lavorgna, Natixis’ chief economist of the Americas. Sure, he conceded in a research note, the money supply—measured by a gauge called M2, mainly deposits sitting in bank accounts—has ballooned.

But, he went on, “the spike in money growth has coincided with a collapse in its velocity.” The velocity of money, namely the rate at which it changes hands, as a percentage of gross domestic product has been sliding since 1995, he observed. Further, it is lower than any time since 1960.

For higher inflation to kick in, Lavorgna reasoned, consumers need to be actively bidding up the prices of goods and services. The low velocity shows they aren’t, though.

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While the economy has logged double-digit gains over the past 12 months, he said, the inflation rate (now 2.6%, but just 1.6% after stripping out volatile food and energy) does not presage “a serious inflationary bulge.”

The downward trending velocity of money means that households aren’t taking on much debt and are expanding their savings, Lavorgna wrote. Bank credit is up only 5.9%, he said, which indicates that both businesses and consumers aren’t wallowing in new debt. What’s more, he added, numerous polls have shown Americans’ inflationary expectations are for under 3% growth in the Consumer Price Index.

“If this continues, he added, “then this is not something to fret about.”

Federal Reserve Chairman Jerome Powell, for his part, on Wednesday portrayed the prospects of long-term inflation to be slender. While he noted that inflation pressures could go up in the coming months, these “one-time increases in prices are likely to only have transitory effects on inflation,” he said in a briefing.

Economists are wrestling with the idea that the pandemic has skewed how inflation and overall economics may have changed. For instance, Robert Cavallo, a Harvard economist, contended in a research paper that inflation is worse for lower-income people, who use more of their income for food. Also, he indicated, the pandemic has messed up global supply chains, leading to bottlenecks that produce temporary shortages of certain goods. 

And economists, to be sure, have pointed out that inflation has been higher than now in the 1980s and 1990s, although still in mid-single-digits. The notion of a return to the 1970s (inflation growth in the teens) is hard to picture almost everywhere, given all the deflationary forces at work globally, such as movement of jobs to cheaper locales and the advance of automation, which lowers production costs.

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