Greenbush businessman James Prange charged in securities scheme

FBI sting rounds up 13 nationwide

A Greenbush businessman is one of 13 people facing federal charges for his alleged role in a securities fraud scheme exposed by an FBI sting.

James Prange, 60, was charged Thursday with wire fraud, which carries a maximum penalty of 20 years in prison. His co-defendants include one other Wisconsin resident — attorney Richard Kranitz, 68, of Grafton — and an array of corporate executives from nine other states.

Read the FBI affidavit in securities case

An FBI affidavit details a sting operation in which an agent posed as an investment fund representative willing to invest in certain companies in exchange for secret kickbacks. Prange agreed to introduce corporate executives to the representative in exchange for a 10 percent share of the kickbacks, and from July to September he helped set up illegal deals with four executives, including Kranitz.

Prange — known locally for his attempts to launch a bratwurst "Hall of Flame" in the mid-1990s — received a total of $6,350 in kickbacks, which was wired to his account by the FBI, the affidavit said. The kickbacks were concealed through the use of sham consulting agreements.

Leonard Peace, spokesman for the FBI in Milwaukee, said Prange was arrested Thursday by Milwaukee agents.

The sting — which began in October 2010 — was one of several FBI investigations into microcap trading, which involves publicly traded companies with stock that often trades at pennies per share, according to a press release by the U.S. Attorney, U.S. Securities and Exchange Commission and the FBI. Authorities said accurate information about these companies is hard to come by, making it fertile ground for fraud.

Prange is the president of Northern Equity Inc., which was in the business of promoting microcap stocks and finding capital for emerging companies, according to the release.

"The public has a right to invest in an honest and fair market. Companies that agree to pay illegal kickbacks harm investors and undermine fair competition in the markets," Carmen Ortiz, U.S. Attorney for the District of Massachusetts, said in the release. "Hard-working Americans who invest their savings should not be subjected to backroom deals like those alleged today."

As part of the investigation, the SEC suspended trading in seven microcap companies involved in the kickback-for-investment schemes.

Kranitz knew Prange from a failed business enterprise that landed the two in hot water with securities regulators 10 years ago, but both were also part of China Wi-Max Communications, the CEO of which is among the defendants in the fraud case. The affidavit said Prange introduced Kranitz and the CEO to the FBI agent posing as an investment representative.

A report on China Wi-Max Communications by Venture Research lists Prange as the company's director of investment relations. A biography in the report said Prange has been president of Northern Equity since 1995, though he was also a vice president with Orion Energy Systems from 2001 until the company went public in 2007.

Kranitz was previously an attorney for Prange's business, Wurst Brothers, which in 1998 opened a bratwurst-themed specialty restaurant in the Johnson Creek Outlet Center.

In 2001, Prange and business partner Alan Pape sent letters seeking investors to expand into a 155-restaurant chain. The state Division of Securities objected — saying the pair made misleading and unrealistic claims about potential profit and sought funds before filing for federal approval to sell franchises — and Kranitz then retracted and rewrote the letter.

Beginning in 1995, Prange and Pape's Wurst Brothers enterprise had attempted to open a brat Hall of Flame in Sheboygan, which was to include a museum, gift shop and restaurant. The pair also pursued locations in Plymouth, Sheboygan Falls and Milwaukee, each time failing to raise the necessary funds or win municipal approval.

In 1996 the pair attempted to launch a line of bratwurst-themed novelties, including a giant sausage hat, T-shirts, aprons and jewelry, but that failed to gain traction as well.