A Minnesota contractor was sentenced Thursday to a year and a day in federal prison for a brazen plot to hijack dormant public shell companies and then sell their stock to unwitting buyers.
The contractor, 45-year-old Mark Miller, is the latest of three men convicted of the securities fraud scheme made public by an indictment filed in June 2021 in U.S. District Court in Minneapolis.
Miller’s attorney asked Judge David Doty to give Miller a suspended sentence. He cited his contracting business, which the Breezy Point man runs with his wife, the fact they have teenage children, and what he described as a “huge disparity” in the parole sentence of one of his co-defendants.
“He’s a family man and a hard worker,” said defense attorney Robert Lengeling of Miller, who has been awaiting sentencing since his guilty plea in October 2021.
“It would be unfair to rip him out of the community,” the attorney said.
Lengeling told Doty that it “frankly felt like we got a punch in the gut” when he recently learned that prosecutors would be asking Miller to a year in prison for the penny stock program. “It was a little surprise.”
“My client is here today and is incredibly afraid of what he is going to do with his company,” said the lawyer.
The one-year sentence prosecutors recommended was significantly less than the 30 to 37-month sentence suggested in federal sentencing guidelines for conspiracy to commit securities fraud.
“Mr. Miller committed a felony,” Assistant US Attorney Melinda Williams told the judge.
“I don’t hear a lot of remorse,” the prosecutor added.
In addition to his sentence, which Miller is expected to serve in August, Doty sentenced Miller to two years’ supervised release when his sentence expired. During this trial period, Miller is prohibited from buying, selling or trading stock.
By giving Miller a day in jail over a year, Judge gave the defendant a break of sorts. Under federal rules, any defendant sentenced to more than a year in prison is eligible for release after 85% of their sentence has been served. Persons sentenced to a prison term of one year or less are not eligible for parole.
Miller is also facing a demand for “more money” from the US Securities and Exchange Commission, which has a civil complaint against him related to the plan, Lengeling told the judge.
As part of a settlement with Miller, prosecutors dropped several of the securities fraud and wire fraud charges originally alleged against him.
Miller, along with his co-defendants Christopher James Rajkaran and Saeid Jaberian, used fake resignation letters allegedly written by executives from several shell companies to seize control of at least four companies from 2017 to 2019.
The companies, which had no significant business, also failed to submit the necessary regulatory documents for some time.
The conspirators then used the SEC’s public EDGAR filing system and fake press releases to fraudulently inflate the stock prices of the hijacked companies by claiming new business opportunities, prosecutors said. Miller and Jaberian, along with an unidentified person related to Miller, became the target companies’ nominal CEOs and presidents, according to prosecutors.
The defendants, who bought many of the shares for less than 1 cent per share, then sold them in the over-the-counter market for many times what they paid for them. Prosecutors said the men made hundreds of thousands of dollars in profits from the plan.
At the time of his criminal indictment, Miller was involved in an attempt to take control of a Florida penny stock company, New World Gold Corp.
This company was not identified as one of the shell company’s seven targets in either the criminal case or a civil lawsuit filed by the SEC against Miller.
Miller voluntarily dropped a lawsuit related to efforts to acquire New World Gold shortly after CNBC reported on his involvement in the company.
Rajkaran, a resident of Queens, New York and Guyana, pleaded guilty to the case in 2021. He was sentenced to 18 months in prison in January 2022. After his release, he was arrested last November and charged with felony drunk driving, according to a federal court filing in April.
Jaberian, also a Minnesota resident, was on track to go to court in his criminal case until he pleaded guilty last November. Doty sentenced him to two years probation on May 10.
During his sentencing Thursday, Miller’s attorney told the judge, “My client has serious concerns about how much we’re going to talk about this case,” citing his prosecution.
Noting that a CNBC reporter followed the hearing via Zoom, Lengeling said, “There is at least one media outlet that has shown keen interest in Mr. Miller’s case.”
“For some reason this was a lewd case for this particular media guy, and I’m not exactly sure why,” Lengeling added.
“Mr. Miller made a mistake and made up for it,” said Lengeling.
The attorney ended the hearing by asking Doty to seal the record of the trial for a decade. Doty did not immediately decide on this request.