CHICAGO — The former Chief Executive Officer of a northwest
suburban nutrition company has pleaded guilty to securities fraud for engaging
in a market manipulation scheme to artificially inflate the company’s stock
price.
ANDREW J. KANDALEPAS, 67, of Schaumburg, pleaded guilty
Tuesday to one count of securities fraud.
U.S. District Judge Gary Feinerman set sentencing for Sept. 5, 2019.
The guilty plea was announced by John R. Lausch, Jr., United
States Attorney for the Northern District of Illinois; and Jeffrey S. Sallet,
Special Agent-in-Charge of the Chicago office of the FBI. The U.S. Securities and Exchange Commission
provided valuable assistance. The
government is represented by Assistant U.S. Attorneys John D. Mitchell and
William Hogan.
Kandalepas was the CEO, President and Chairman of the Board
for Wellness Center USA Inc., whose principal place of business was in Hoffman
Estates. The company raised more than
$19 million from investors through the sale of common stock, and Kandalepas
himself held more than three million shares.
Kandalepas admitted in a plea agreement that from December 2012 to June
2015, he bought and sold Wellness Center shares for the purpose of artificially
inflating the stock price.
Many of his trades occurred at or near the close of normal
trading hours in a form of market manipulation known as “marking the
close.” According to an example cited in
the plea agreement, Kandalepas, using a brokerage account in the name of an
acquaintance, executed a trade to buy 300 Wellness Center shares within the
last five seconds of the trading day on May 4, 2015. The trade artificially raised Wellness
Center’s share price by 4%, from $0.27 to $0.28, causing a profit for
Kandalepas of approximately $30,000.
In all, Kandalepas netted at least $136,176 in trading
profits for his personal use.
Securities fraud is punishable by up to 20 years in prison. The Court must impose a reasonable sentence
under federal statutes and the advisory U.S. Sentencing Guidelines.
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