Two California men, Ronald Touchard and Paul Garcia, have been charged in a sophisticated stock-manipulation scheme that defrauded investors out of approximately $2 million. According to federal prosecutors, the duo carried out a so-called pump-and-dump scheme in 2018, manipulating the stock price of HQ Global Education, a consulting company operating in the CBD oil and hemp industry at the time.
Touchard, 65, of Newport Beach, and Garcia, 61, of Costa Mesa, are facing charges in federal court in Cleveland, including conspiring to commit securities fraud and securities fraud. Both men are scheduled to appear in court on July 29. Currently, no attorneys for the defendants are listed in court records.
The scheme spanned from November 2017 through December 2018. During this period, Touchard and Garcia used shell companies to manipulate the stock price of HQ Global Education. Touchard owned International Stock Group Inc., and Garcia owned Hemmingway Holdings LLC. These companies merged with HQ Global Education, setting the stage for their fraudulent activities.
The indictment details how Touchard and Garcia issued millions of shares of HQ Global Education to themselves at little or no cost. They then employed various manipulative trading techniques and promotional strategies to artificially inflate the stock price. One key tactic involved issuing favorable press releases to generate attention and create a false impression of the company’s success.
To further boost the stock price, Touchard and Garcia coordinated the sale of large blocks of shares simultaneously with the dissemination of the press releases. This strategy was designed to make it appear that the stock was performing well in the market. Additionally, they operated so-called boiler rooms, where promoters used high-pressure sales tactics to cold-call potential investors and persuade them to buy the stock.
Once the stock price was sufficiently inflated, Touchard and Garcia “dumped” their shares by selling them to unsuspecting investors. They concealed their actions, making it appear as though they were not profiting from the transactions. Court records indicate that the stock promoters involved in the scheme were paid fees for their efforts and subsequently provided kickbacks to Touchard and Garcia.
Prosecutors assert that very little, if any, of the investors’ money went toward the actual operations of HQ Global Education. Instead, the funds were siphoned off by Touchard and Garcia, leaving investors with nearly worthless stock. The indictment highlights the fraudulent nature of the scheme, which preyed on investors’ trust and resulted in significant financial losses for those who bought shares at inflated prices.
The case underscores the severe consequences of securities fraud and the importance of regulatory oversight in protecting investors from deceptive practices. It also serves as a reminder of the potential risks associated with investing in companies without conducting thorough due diligence.
This high-profile case has drawn attention not only due to the amount of money involved but also because of the sophisticated methods used to execute the scheme. Touchard and Garcia’s actions have highlighted the vulnerabilities within the stock market and the need for robust enforcement of securities laws to prevent such fraudulent activities.
The extent of the scheme and its effects on investors will probably become clear as the legal proceedings progress, offering more information about the techniques employed by the scammers and the steps that need to be taken to stop similar scams in the future. Regulators, investors, and legal experts will be closely following this case because the verdict could establish significant precedents for handling securities fraud and defending investor interests.