A Spokane brother and sister are accused of participating in an expansive “pump-and-dump” penny stock scheme to defraud investors.
A federal lawsuit listed Robin M. Rushing and David K. Rushing among 34 defendants whom the U.S. Securities and Exchange Commission wants to recover money from and bar from working in the penny stock industry. The SEC said the group inflated stock prices for sham companies through the Costa Rica-based brokerage firm Moneyline Brokers.
The lawsuit filed last week in Manhattan comes two decades after Robin Rushing was investigated in what the New York Times called “one of the most flamboyant stock scandals of 1996.”
The defendants include owners and employees at six stock brokerage firms, two microcap issuers and several customers and stock promoters in Costa Rica, Canada, New York, Nevada, Florida and Washington.
Nine of those defendants – not including the Rushings – also were indicted last week in a separate suit which claims they laundered $6.5 million in illicit proceeds through wire fraud and overseas bank accounts.
At the top of the alleged scheme is Harold Bailey Gallison II, who first worked with Robin Rushing in the early 1990s at the now-defunct San Diego firm Burnett Grey Inc., according to the SEC lawsuit. Gallison was sentenced to five years in prison in 2002 for securities fraud and has faced hundreds of thousands of dollars in fines since he started trading in 1989. He has long been barred from trading stocks.
Gallison and Robin Rushing apparently have continued working together since the 1996 scandal. That suit claimed they continued trading stocks of a company that couldn’t prove it owned any of its purported assets, including a new-age thumbprint identification device that the company allegedly stole from Scottish researchers.
An Aug. 18, 1996, article in the New York Times said: “The cast of characters grew to include a swindled Scottish scientist, a mysterious Malaysian businessman, a Yugoslav prince who committed suicide on the company’s premises, and (the company)’s former corporate secretary, who later appeared in a pornographic video and is, she says, a witch.”
Robin Rushing, 58, was fined $5,000 in 1999 for violating stock regulations. She is a Moneyline employee who appears to work from Spokane, according to the lawsuit. Her brother, David Rushing, 59, also appears to live in Spokane and worked for the company until 2010. Contact information for the two could not be found online or in local phone listings.
“This case demonstrates the (Securities and Exchange) Commission’s resolve to relentlessly pursue the villains behind these microcap fraud schemes wherever in the world they may be hiding,” Andrew Calamari, director of the SEC’s New York regional office, said in a written statement.
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