In the Courts

According to prosecutors, Knox, together with others, illegally sold massive quantities of microcap securities via Silverton SA (later renamed to Wintercap SA), on behalf of investor "control groups" who secretly owned the stock through nominee shareholders (being fake shareholders that held the stock in name only). The "microcap" or "penny" stocks involved are publically traded U.S. companies that have a low market capitalization and are most often priced below $1 per share. They are particularly susceptible to price manipulation because large blocks can be controlled by a small number of individuals while also being subject to fewer reporting requirements than larger companies. Using nominee shareholders allowed the true investors to hide the actual depth of their ownership, avoiding regulatory disclosure requirements including the U.S. Securities and Exchange Commission's (SEC) so-called "5% rule" that requires disclosure when a person or group of persons acquires beneficial ownership of more than 5% of a voting class of a company's registered securities.

To carry out the scheme, a stock promoter would artificially inflate the value of the stock via release of exaggerated information promoting the false appearance of interest and activity (the "pump") so that the control group could then sell their large positions for a profit (the "dump"), all the while remaining hidden behind nominee shareholders and Silverton SA. According to the FBI, in this way Knox funneled the proceeds from the sales of more than 100 different publicly traded companies to various co-conspirators in the U.S. and overseas via a complex money transfer system concealing the source and nature of the funds. In total the scheme diverted an estimated $164 million out of the U.S. market illegally since June 2015. As payment for his role in orchestrating the scheme on behalf of the investor control groups, Knox received a 6% commission based on the proceeds of the stock sales.