The Tribune

By NEIL HARTNELL

Tribune Business 
Editor

nhartnell@tribunemedia.net

A Freeport resident has been charged by US regulators with perpetrating a securities fraud that increased two companies’ stock prices by 600 per cent and 300 per cent respectively.

The Securities & Exchange Commission (SEC), in a lawsuit filed in the north Georgia district court last week, alleged that Anthony K. Welch had taken control of two small, microcap stocks and then issued a series of “false and misleading press releases” designed to pump up their share prices.

The lawsuit describes Mr Welch as being “now based offshore, most recently in Freeport, the Bahamas”. Several Tribune Business contacts in Grand Bahama confirmed that they knew who Mr Welch was, and that he is still living on the island.

The SEC is seeking a “permanent injunction” against Mr Welch to bar him from participating in the securities industry on the grounds of his alleged fraud.

Detailing how the scheme worked, the US capital markets regulator alleged that he took over two microcap stocks, eHydrogen and ChromoCure, both of which are now “essentially defunct entities with no assets and little to no actual business operations”.

Noting that a Mississippi firm Mr Welch formerly headed, Maxim Advisors, had its registration revoked in 2004 for issuing “false and misleading promotional material”, the SEC added: “Anthony Welch is an American citizen who resides in the Bahamas.

“From at least March 2010 through August 2010, Welch issued press releases and made other public disclosures containing false and misleading information concerning, among other things, technologies acquired by - and revenues generated - by eHydrogen and ChromoCure.

“The period of the press releases coincides with suspicious price and trading volume increases in the respective issuers’ stock.”

The SEC alleged that the two companies had frequently changed their names, and “had little to no revenue or actual business operations”, before Mr Welch obtained control of them in mid-2009.

It claimed he then embarked on a promotional campaign via the Internet for both eHydrogen and ChromoCure, which supposedly specialised in hydrogen production technologies and cancer detection systems, respectively.

“In multiple instances such statements were intentionally false and misleading, distributed by Welch for no purpose other than to incite trading activity and artificially inflate the price and trading volume of eHydrogen and ChromoCure,” the SEC alleged.

Among the false and misleading statements cited by the SEC were a claim that eHydrogen had raised $2 million from an intellectual property deal; that ChromoCure’s cancer detecting technology was “100 per cent accurate for all cancers at all stages; and that ChromoCure was involved in a $29 million merger.

Mr Welch was alleged to have also falsely claimed that eHydrogen had generated $15.9 million in revenue for the period to end-June 2010, with assets increasing by 1,360 per cent. The company’s technologies were also said to have a market value of $6.736 million.

“As with many similar promotions, Welch’s concerted press release activity appears directed at not just a single point in time, but at an overall heightened degree of activity throughout the entirety of the campaign,” the SEC alleged.

“With respect to eHydrogen, its stock price increased nearly 600 per cent at points throughout the campaign, with various irregular spikes throughout.

“Volume increased in a corresponding fashion, from no recorded transactions on March 1, 2010, up to approximately 10.8 million shares trading on June 3, 2010.”

It was the same for ChromoCure. The SEC alleged: “ChromoCure’s stock exhibited similar, if not more ,sporadic activity, increasing approximately 300 per cent from a pre-campaign low of $0.0001 on February 19, 2010, to $0.0003 on six separate trading days in March 2010.

“ChromoCure’s stock volume spiked from a low of approximately 30.5 million shares on February 17, 2010, to a high of 1.8 billion shares on April 15, 2010.”

The SEC is now seeking an Order requiring Mr Welch to turn over any financial gains from the alleged scheme, and pay various financial penalties.