A trader for a group of hedge funds pleaded guilty Thursday for his role in a stock manipulation scheme that fleeced investors out of more than $200 million and involved a former Beverly Hills stockbroker.
Colin Heatherington, 49, of Vancouver, Canada, pleaded guilty to one federal count of conspiring to commit securities fraud and wire fraud and admitted his role in the scheme run out of Absolute Capital Management Holdings — known as Absolute Funds — a Cayman Island-based company that managed eight hedge funds from offices in Mallorca, Spain.
Heatherington was a securities trader who worked closely with the founder and chief investment officer of Absolute Funds, Florian Wilhelm Jürgen Homm, 64, a German financier who was indicted in March 2013 and is currently a fugitive from justice.
As part of the scheme, Heatherington oversaw the purchase of billions of shares of United States-based penny stocks, which were then traded using various manipulative practices, such as cross trading, which fraudulently inflated the value of the stocks and, in turn, the value of the Absolute Funds.
Heatherington and others in the scheme also reaped profits through self-dealing trades in which they sold their own shares of artificially inflated penny stocks to the Absolute Funds.
Another defendant in this case — former Beverly Hills stockbroker Todd Ficeto, 57 — was sentenced to six years in federal prison in July 2020 after being convicted in Los Angeles federal court of 18 felonies relating to his managerial role in the scheme to manipulate penny stock prices, which garnered him many millions of dollars from fees and commissions and self-dealing trades.
Heatherington pleaded guilty before U.S. District Judge John A. Kronstadt, who scheduled a sentencing hearing for May 9, at which time, Heatherington will face a possible sentence of up to 25 years in federal prison, prosecutors noted.