Donald Danks of Irvine was convicted by a federal jury today on multiple counts, including conspiracy to commit securities fraud, witness tampering, obstruction of justice, and perjury. The jury found Danks guilty after a two-week retrial in connection with a multi-million-dollar scheme involving the stock of Loop Industries, Inc.
Inside information and stock manipulation
Danks engaged in a six-year securities fraud scheme while serving as a board member and audit committee member for Loop. Evidence presented at trial showed that Danks used his position to obtain nonpublic information and influence investors. He solicited investors to purchase more than $100 million in Loop stock, often directing them to buy at specific times, prices, and volumes to manipulate the stock price.
The scheme was executed through Ventanas Capital LLC, a shell company Danks created with a former associate. To further obscure the origin of the trades, Danks established fictitious employees within the entity. He transferred hundreds of thousands of Loop shares to Ventanas and gradually sold them to finance his lifestyle. The company functioned as a necessary tool to conceal his identity as the seller, as he was legally required to disclose his control and trading of Loop stock.
Danks profited more than $4 million from the scheme. He repeatedly promoted Loop as a strong investment while secretly selling shares through Ventanas. During this time, he represented that he was purchasing shares, a contradiction that prosecutors say highlighted the deceptive nature of his conduct.
Read Also: U.S. sees earliest snowfall records ahead of winter outlook
Obstruction and the second trial
After the SEC and FBI began investigating, Danks and his associate took additional steps to conceal the fraud. They fabricated and backdated promissory notes to create the appearance of legitimate loans. Documents purportedly created over a period of years were actually prepared at the same time, according to evidence presented at trial.
Danks testified about those documents during his first trial without disclosing that they had been created after the investigation began. The false testimony contributed to a mistrial. He also tampered with his associate, encouraging her to repeat his false account of who controlled their shell company.
This type of conduct demonstrates how insider trading schemes often extend beyond the initial financial crime. When regulators investigate, the pressure to hide past actions can lead to additional offenses like perjury and witness tampering, compounding the legal consequences for the individuals involved.
