Bulgarian Man Charged in Securities Hoax

Manhattan federal prosecutors unsealed charges Thursday against a Bulgarian man, accusing him of orchestrating bogus takeovers of publicly traded companies, including one involving Avon Products Inc. last year that caused the New York Stock Exchange to halt trading in Avon three times.

U.S. Attorney Preet Bharara said Nedko Nedev manipulated the stock of Avon and Rocky Mountain Chocolate Factory Inc. through sham tender offers. Mr. Bharara charged Mr. Nedev with eight criminal counts, including market manipulation and insider trading.

Mr. Nedev was arrested by authorities in Sofia, Bulgaria, Thursday and prosecutors said they would seek his extradition.

Last June, the Securities and Exchange Commission charged Mr. Nedev, alleging he directed a yearslong series of stock-market manipulations that used a network of offshore firms and Internet addresses fraudulently to pump up share prices in companies, culminating in the Avon bid.

The scheme sent Avon's shares soaring to a more than 20% increase, after an entity calling itself PTG Capital Partners Ltd. said in a securities filing that it had lodged a bid of $18.75 a share to buy the company. PTG was a front company created and controlled by Mr. Nedev, prosecutors and regulators alleged.

Despite the wild swings in Avon stock, Mr. Nedev netted just $5,000 on the maneuver, regulators alleged.

Prosecutors said that several years earlier, between January 2012 through at least December 2012, Mr. Nedev manipulated Rocky Mountain stock, through a sham tender offer. That company's stock rose 23% in 2012 after a bogus news release was issued.

In between the Rocky Mountain scheme and the Avon scheme, prosecutors said Mr. Nedev traded on inside information about an offer by Euroins Insurance Group AD to acquire U.S. based insurer Tower Group international Ltd. in 2014. Mr. Nedev had learned the news from Euroins chairman, who had hired Mr. Nedev as an external consultant, prosecutors alleged.

Mr. Nedev had been something of a mystery. Last year, a law-enforcement official in Bulgaria told The Wall Street Journal Mr. Nedev might not be a real person.

Mr. Nedev couldn't be reached for comment.

Write to Christopher M. Matthews at [e-mail]

(END) Dow Jones Newswires

March 10, 2016 20:15 ET (01:15 GMT)

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