Businessman Indicted for Manipulating Five Publicly Traded Companies and Defrauding Investors of Over $200M

Note: A copy of the indictment can be found here.

A federal grand jury in Dallas, Texas, returned an indictment yesterday charging a Texas businessman for his role in a yearslong scheme involving at least five publicly traded companies.

According to court documents, Philip Verges, 59, of Dallas, controlled five publicly traded companies, which he used to engage in an investment fraud scheme from approximately January 2017 through August 2022. As part of the alleged scheme, Verges concealed his involvement in these five companies from the investing public by appointing trusted friends to serve as nominees. Verges then allegedly entered into sham consulting agreements with the companies that allowed the companies to execute convertible notes, which could be converted to shares at a steep discount from their fair market value. Verges allegedly artificially inflated the price and trading volume of shares by, among other things, issuing false public press releases and financial statements. As further alleged, Verges then sold his convertible notes to intermediaries who converted the notes into shares at below-market prices, sold the shares into the market for a profit, and shared the proceeds from the sales with Verges. In total, the alleged scheme resulted in approximately $211 million in losses to the public.

Verges is charged with one count of securities fraud and two counts of money laundering. If convicted, he faces a maximum penalty of 20 years in prison on the securities fraud count and 10 years in prison on each money laundering count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division, and Special Agent in Charge Gregory D. Nelsen of the FBI Cleveland Field Office made the announcement.

The FBI is investigating the case.

Trial Attorneys Brandon Burkart and Matt Kahn of the Criminal Division’s Fraud Section are prosecuting the case.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.