Prosecutors: Identity theft hid stock fraud

Federal grand jury indicts 2 former execs of defunct Springs firm

By David Milstead, Rocky Mountain News (Contact)

Published November 30, 2007 at 12:05 a.m.

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Prosecutors say two former executives of a small public company in Colorado Springs hid their stock fraud by stealing the identities of Mexican citizens.

A federal grand jury indicted Eric Richfield Majors, 37, of South Africa and Joshua Neale Wolcott, 34, of Denver. Majors was CEO and Wolcott CFO of Maximum Dynamics, a now-defunct Colorado Springs company.

Maximum Dynamics went public in November 2002, describing itself in public filings with the Securities and Exchange Commission as a development-stage company offering computer software for financial institutions.

For the next two years, the company said it was expanding and issuing stock as compensation to employees and consultants.

Instead, prosecutors allege, the stock was going to Majors and Wolcott, who sold it on the open market and pocketed proceeds.

To hide the scheme, the two used the names of Mexican citizens whose identities they "misappropriated," the indictment alleges. Maximum Dynamics claimed the Mexicans were consultants.

Registration statements filed with the SEC between December 2002 and December 2004 claimed four men were registering and selling nearly 8 million shares.

In an affidavit filed with the indictment, Internal Revenue Service criminal investigator Robert C. Smith said the SEC had determined the men - later found to be Mexican nationals - were "associated in some way" with Victor Angel, a Colorado Springs man who was consulting for Maximum Dynamics.

But the SEC "found no evidence" the men did any consulting work.

Smith's affidavit said Victor Angel and his cousin, Ernesto Angel, told investigators that none of the men did work or received any stock.

Victor Angel also claimed Majors told him he was responsible for the scheme.

The indictment also says Maximum Dynamics used the Mexicans' identities to create sham transactions that misstated the company's revenue and assets. The SEC said Majors in 2000 gave 475,000 shares of Maximum Dynamics stock to Elektra Marketing, in exchange for "hedge fund administration market research."

The SEC said Majors created the company and named Graciela Colomer Ballesteros as its director, even though, as the SEC says, she was an "elderly housewife . . . (who) did not know anything about hedge fund administration market research or Elektra Marketing."

The SEC sued Majors and Woolcott for civil fraud Monday. Neither could be reached for comment.

The SEC suspended trading of Maximum Dynamics stock in February 2005 "because of questions regarding the accuracy of assertions to investors" in one of the company's filings and press release.

Majors then said in a news release, "It is my personal belief that the entire investigation launched by the SEC may be tainted by faulty information sent to them by anonymous undisclosed sources, for some specific gain that may also include the shorting of the stock of the company."

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