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Feds: Father-daughter team nets $70M in fraud

TAMPA — A local father and daughter are accused of hijacking the identity of defunct corporations, selling bogus stocks and pocketing $70-million in illicit gains.

The fraud scheme had international reach, emptying the wallets of investors in Great Britain and elsewhere, federal authorities said.

Agents arrested Paul Robert Gunter, 58, of Odessa and his daughter Zibiah Joy Gunter, 25, of Oldsmar on Thursday. They are charged with conspiring to commit, and committing, substantive acts of mail fraud, wire fraud, securities fraud and money laundering.

The U.S. Securities and Exchange Commission described it as a "corporate hijacking" scam in which thieves stole the identities of dormant companies and then sold the companies' stock as though they owned them.

Federal agents said the Gunters and unnamed conspirators fraudulently used at least 54 publicly traded shell companies.

Prosecutors and U.S. Immigration and Customs Enforcement officials said that from at least the spring of 2005, the Gunters and others worked the scheme, using "high-pressure and misleading sales techniques" to get British investors to wire money to Central Florida banks, then used the money for themselves.

The SEC suspended trading Thursday in 26 companies associated with the Tampa case. The companies' names implied they were engaged in such businesses as energy, real estate, gambling and fitness. In reality, the SEC says they weren't operating at all when they were taken over.

U.S. Magistrate Judge Thomas B. McCoun III ordered the pair detained until a detention hearing on Monday, where prosecutors are expected to offer more details. The criminal complaint was not available Thursday.

Neither father nor daughter has criminal records in Florida.

Court records show that Paul Gunter filed for Chapter 7 bankruptcy in September 2002. A final decree was issued and the case closed in December 2005.

Records show that Paul Gunter owned two companies: Home Town Properties Suncoast and Home Town Properties of Florida Development. Prosecutors said they traced fraudulent proceeds into bank accounts for both.

Neighbors said Paul Gunter arrived last year on Odessa's Cosme Road, which knifes between orange groves and Horse Lake. Carleen Burnett, who had grown up on the country lane, introduced Gunter as "my new husband," and they described plans to build a house next to their modest lakefront ranch house.

In November 2004, Zibiah Gunter bought condo 138 in Oldsmar's East Lake Woodlands Condominiums. She and a roommate moved upstairs from Maryellen Chester, who was head of the condo association.

Chester said Zibiah was a new college graduate, loud and social, and didn't fit well with her neighbors, many of whom are retirees.

Chester called Paul Gunter "a strange character." From her patio below, she could hear him when he visited, Chester said.

"The father would meet people upstairs when the girl was not there," Chester said. "They would talk and talk and talk."

Zibiah Gunter abruptly moved away after a year or so and now rents out the condo, said Chester.

Zibiah Gunter has a MySpace page that shows she last logged in on Thursday. It listed her mood as "happy" and included a header that said, "CutiePie is going to have a great day!!!!!"

Penny stock fraud has been costing investors for decades, but the Tampa-based fraud revealed Thursday had a different twist.

"They identified an area of weakness in the system, and they were able to exploit that to their advantage," said John Polise, an SEC specialist in fraud involving small, thinly-traded stocks.

The SEC says the scheme worked this way: The thieves targeted companies that existed only on paper as corporate "shells" that still met the legal requirements to be publicly traded. They created a new corporation using the same name, then represented themselves to the SEC as officials of the original shell company. This enabled them to get a new CUSIP number for the company's stock, an identification number that allows a security to be traded.

Some of the companies have Web sites and have issued news releases, although it's not clear what kind of operations they have. One, Paramount Gold and Silver Corp. of Ottawa, said Thursday in a news release that the SEC's allegations "do not adequately reflect the corporate history of the company."

"Hijackings are a burgeoning problem," said Linda Chatman Thomsen, director of the SEC Division of Enforcement. "This is a first step. We will continue to vigorously investigate."

Polise said the SEC has made it easy to get new CUSIP numbers, which are commonly dispensed in connection with mergers and corporate recapitalizations.

Most of the companies in question traded on the "Pink Sheets," an electronic market favored by companies that don't meet the more stringent requirements for listing on an exchange. Trading was formally suspended through March 27 on grounds that "there is a lack of current and accurate information" about them.

The suspended stocks include Florida companies Andros Isle Development Corp. of Miami, which says it is in the business of acquiring Caribbean resorts; Cobra Energy Inc. of Boynton Beach, which says it's into diamond mining; and IQ Webquest Inc. of Fort Lauderdale, which says it operates social networking and online dating sites.

Canadian securities and law enforcement officials were also involved in the investigation.

In a prepared statement, Robert Wishart, head of the money laundering unit at the city of London police, said about 15,000 British residents, mostly elderly, had lost money to the scheme.

"Criminals may think that because they are laundering money through a number of foreign jurisdictions, they will not be caught," but this coordinated international law enforcement effort proved "there is no hiding place,'' Wishart said.

Times researchers Caryn Baird and John Martin contributed to this report. Kevin Graham can be reached at kgraham@sptimes.com or (813) 226-3433. Helen Huntley can be reached at huntley@sptimes.com or (727) 893-8230.

Feds: Father-daughter team nets $70M in fraud 03/13/08 [Last modified: Monday, March 17, 2008 2:23pm]
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