Clearwater Company's CEO Among 14 Arrested on Fraud Charges

Federal authorities have arrested 14 people, including the CEO of a Clearwater-based company, in two federal indictments that allege long-term schemes to manipulate stock prices that led to more than 20,000 investors losing more than $30 million when the artificially inflated stock prices collapsed.

As one defendant described the scheme during a wiretapped phone call:
“What I do is turn stock into money.”

Among those arrested Wednesday was Dwight Brunoehler, 62, of Maitland, who is the CEO of Clearwater's Biostem, a company that purported to develop and license regenerative stem cell treatments, including hair regrowth technology.

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The arrests were based on two grand jury indictments that detail two separate, large-scale fraud schemes in which conspirators:

• gained control of the majority of the stock of publicly traded companies, often co-opting company management to assist in these efforts;

• concealed their control of the stock by purchasing and transferring shares to offshore accounts and to nominee entities with names such as “Dojo,” “Picasso,” and “Big Dog”;

• fraudulently inflated the prices and trading volumes of the companies’ stocks through slick marketing campaigns, misleading press releases, payments to stock promoters, and “cross-trading” among co-conspirators that made it appear the stocks were being actively traded;

• coordinated the sale of the companies’ shares at the peak of the fraudulently manipulated market; and

• hid profits in nominee and offshore accounts.

According to court documents, the defendants are serial market manipulators who carried out several fraudulent deals each year, each of which generated several million dollars.

According to a press release from the United States Attorney's Office:

The defendants generally targeted marginal companies operating in areas they believed could easily be touted as generating breakthroughs or deals that would explain sudden increases in trading volume and price, including companies purportedly involved in pharmaceuticals, hair restoration, green technologies, entertainment, oil and gas development, and e-commerce websites.

The indictments allege that increased trading volume and higher stock prices were actually the result of the defendants’ fraudulent actions.

A company CEO brought into one of the schemes summed up a typical deal during a wiretapped call: “There's nothing in there, there’s nothing to the company. It’s monkey business.”

Also among those arrested Wednesday was Curtis Platt, 51, of Sarasota, who controlled Big Dog International, LLC.

If convicted, each of the defendants would face maximum penalties of at least 100 years in federal prison.