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Articles Posted in Pump and dump scheme

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Dr. Philip Frost, CEO and chairman of Opko Health, has agreed to a proposed settlement with the SEC in a microcap stock manipulation scheme.Back in October, we told you about charges filed by the SEC against Florida businessman Barry Honig in a microcap stock manipulation scheme that netted Honig and his associates $27 million in fraudulent funds.

One of those associates, Dr. Philip Frost, has agreed to a proposed settlement with the SEC in this case. Frost is a biotech billionaire who is CEO and chairman of Opko Health and former chairman of Teva Pharmaceutical Industries Ltd. He was among ten people and ten entities charged in September in relation to the “pump-and-dump” stock scheme. Continue reading

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The SEC has brought additional charges against a Long-Island, New York-based boiler room that was sued for defrauding elderly and unsophisticated investors. The latest charges allege that Christian Romandetti, CEO of First Choice Healthcare Solutions Inc., the boiler room, and four others have committed fraud within the company’s shares and have generated more than $3.3 million of illegal profits. The new charges also allege that the parties generated more than $560,000 in kickbacks for Romandetti.

The SEC’S statement alleges that Romandetti and the other parties lied to more than 100 victims in a scheme that inflated First Choice’s stock price from less than $1 per share to $3.40 per share. From September 2013 until June 2016, the parties used several accounts to disguise their trading, and engaged in fraudulent trading practices. Elite Stock Research, a boiler room run by one of the defendants, Anthony Vassallo, was hired to promote First Choice to investors.

The SEC originally charged Elite Stock Research with bilking victims out of more than $10 million through fraudulent sales tactics and lies about penny stocks. Seven of the 13 individuals have pleaded guilty to criminal charges brought by the U.S. Attorney’s Office for the Eastern District of New York. The litigation against the 13 individuals is still continuing.

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Home growers of medical marijuana will find no shortage of gardening supplies available made just for their crops. Our marijuana litigators are seeing many bogus suppliers.

One company that supplies equipment and supplies for the home grower is GrowLife, (PHOT) headquartered in Kirkland, Washington. With stores in Encino, CA, Portland, ME and Calgary, Alberta in Canada, GrowLife offers hydroponic equipment, nutrients, soils, lighting, indoor cultivation equipment and plant growing systems.

On September 19, 2018, the company issued a press release announcing a rights offering, allowing company shareholders to acquire additional shares of GrowLife common stock. Calling it The Offering, the company gives shareholders the opportunity to invest in the company to help it raise additional funding and continue to expand. This stock currently trades at around $0.0122, and is considered a “penny stock” or “microcap stock.” However, because these stocks are smaller, they don’t meet the minimum for trading on a national exchange like the New York Stock Exchange or the NASDAQ. Information may be more difficult to find.

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There are many different types of investment and securities fraud scams designed to bilk investors out of millions of dollars. Sometimes even billions.

As was the case of one of the world’s most famous Ponzi schemers, Bernie Madoff, who is spending the rest of his life in prison.

Attorney Scott Silver, of the Silver Law Group says:

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South Florida businessman Barry Honig of Boca Raton is one of several people named by the SEC in a microcap stock fraud indictment involving manipulation of stock values of three companies. Using a “classic pump-and-dump” technique, the SEC alleges, Honig and others increased the companies’ stock values and dumped them. Investors were left with deflated stock after the scheme was discovered.

The Woodbridge Group of Companies is Under Investigation by the SEC on elderfinancialfraudattorneys.comThe SEC is seeking civil relief penalties and disgorgement of the ill-gotten gains against the defendants and the companies.

The Scheme

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A pump and dump scheme is a method used by fraudsters to artificially boost the price of a security that they own shares of in order to make a profit. According to the Securities & Exchange Commission, pump and dump schemes consist of two parts. First, stock promoters will try to boost the stock price by sharing misleading or false statements about the underlying company’s performance. The promoters may use several methods to spread this false information, including cold calling, emailing, and social media. The promoters may claim to have inside information on the company, and will often encourage their followers to quickly purchase shares of the stock.

Then, once the stock price is inflated by this false information, the promoter will put his own shares of stock on the market, selling them at an artificially high price. This harms investors purchasing these shares because they now hold stock that may drop drastically in price once it is revealed that the information is false.

Engaging in a pump and dump scheme is a violation of both FINRA rules and federal securities laws. FINRA requires that its members refrain from engaging in fraudulent or deceptive practices. FINRA also requires its members to “observe high standards of commercial honor and just and equitable principles of trade.”

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