A cautionary tale: SEC MFTF hammers four stock tou
Post# of 36728
Posted On: 08/05/2014 10:00:05 PM
A cautionary tale: SEC MFTF hammers four stock touts for pumpanddump of two MMJ stocks and four other microcaps. Touts involved include principals of Money Runners Group, Stock Haven, and Explosive Alerts.
"The SEC seeks temporary, preliminary, and permanent injunctions along with an emergency asset freeze, disgorgement, prejudgment interest, financial penalties, and orders barring the promoters from participating in a penny stock offering."
“ Our Microcap Fraud Task Force is taking direct aim at abusive practices and serial violators within the microcap markets like these four promoters seeking to exploit retail investors for personal gain,” said Michael Paley, co-chair of the SEC’s Microcap Fraud Task Force."
“In this case, we meticulously reviewed trading records and developed the evidence necessary to connect these four promoters and their coordinated trading efforts.”
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Lead Financial Ltd. of Mumbai working through Microcap Innovations was heavily implicated, per Savage DD, in $600K promotional pumpandump of SKTO in April 2014.
SEC suspended AEGY and SKTO because of questions regarding, among other things, the respective company's business activities, the control of the company and the trading in its securities.
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Washington D.C., Aug. 5, 2014 — The Securities and Exchange Commission today charged four promoters with ties to the Pacific Northwest for manipulating the securities of several microcap companies, including marijuana-related stocks that the agency has warned investors about in recent weeks.
The SEC alleges that the four promoters bought inexpensive shares of thinly traded penny stock companies on the open market and conducted pre-arranged, manipulative matched orders and wash trades to create the illusion of an active market in these stocks. They then sold their shares in coordination with aggressive promotional campaigns that urged investors to buy the stocks because the prices were on the verge of rising substantially. However, these companies had little to no business operations at the time. The promoters reaped more than $2.5 million in illegal profits through their schemes.
Two of the companies manipulated in this case – GrowLife Inc. and Hemp Inc. – claim to be related to the medical marijuana industry. The SEC has issued an investor alert warning about possible scams involving marijuana-related investments, noting that fraudsters often exploit the latest growth industries to lure investors into stock manipulation schemes. Other schemes by these four promoters involved an oil-and-gas company – Riverdale Oil and Gas Corporation – and three other microcap stocks, ISM International, Allied Products Corp, and Aden Solutions.
The SEC was able to unearth the schemes through the work of its recently created Microcap Fraud Task Force.
“Our Microcap Fraud Task Force is taking direct aim at abusive practices and serial violators within the microcap markets like these four promoters seeking to exploit retail investors for personal gain,” said Michael Paley, co-chair of the SEC’s Microcap Fraud Task Force. “In this case, we meticulously reviewed trading records and developed the evidence necessary to connect these four promoters and their coordinated trading efforts.”
The SEC’s complaint filed in federal court in Tacoma, Wash., charges the following individuals:
Mikhail Galas, a stock promoter who lives in Vancouver, Wash.
Alexander Hawatmeh, a member of Worthmore Investments LLC, which owns a stock promotion website called stockhaven.com. He formerly lived in Vancouver and currently resides in Lincoln City, Oregon.
Christopher Mrowca, a stock promoter who operates Money Runners Group LLC, which has an affiliated stock promotion website called MoneyRunnersGroup.com. He lives in Bradenton, Fla.
Tovy Pustovit, who owns a stock promotion website called Explosive Alerts. He also lives in Vancouver.
In a parallel action, the U.S. Attorney’s Office for the Western District of Washington announced criminal charges against Galas, Hawatmeh, and Mrowca.
According to the SEC’s complaint, GrowLife Inc. was part of a broader online promotion of several marijuana-related stocks in early 2014. Mrowca specifically promoted GrowLife through his Money Runners Group website and predicted that the stock price would nearly double. Mrowca, Galas, and Hawatmeh meanwhile engaged in manipulative trading designed to increase the price and volume of GrowLife stock, and they later sold their shares for illicit profits.
Similarly, the SEC alleges that Hawatmeh, Galas, and Mrowca bought and sold approximately 41.7 million shares of Hemp Inc. in January and February 2014 while the stock was actively promoted on the Internet. For example, one Internet tout on February 6 claimed that Hemp could reach “a REAL Possible Gain of OVER 2900%.” During the promotion, Hawatmeh, Mrowca, and Galas engaged in manipulative wash trades and matched orders to manipulate Hemp’s common stock before selling their shares for illegal gains.
“This was a carefully planned operation by Galas, Hawatmeh, Mrowca, and Pustovit to distort the performance of specific penny stocks as they were simultaneously promoted through social media and the Internet. As the companies’ stock prices increased, these four promoters opportunistically dumped their shares for illicit gains,” said Amelia A. Cottrell, associate director in the SEC’s New York Regional Office.
The SEC’s complaint charges Galas, Hawatmeh, Mrowca and Pustovit with violating antifraud provisions of the federal securities laws. The SEC seeks temporary, preliminary, and permanent injunctions along with an emergency asset freeze, disgorgement, prejudgment interest, financial penalties, and orders barring the promoters from participating in a penny stock offering.
The SEC’s complaint names Nadia Hawatmeh as a relief defendant for the purposes of recovering ill-gotten gains in her brokerage account, which was used by the promoters to conduct some of their manipulative trades.
The SEC’s investigation has been conducted by Michael Paley, Eric M. Schmidt, Mona Akhtar, Joseph Darragh, and Tejal Shah. The case was supervised by Ms. Cottrell, and the litigation will be led by David Stoelting. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Western District of Washington, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority.
SEC PR
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http://seattletimes.com/html/businesstechnolo...ksxml.html
August 5, 2014
SEC, federal prosecutors charge NW promoters with stock manipulation
The US Attorney’s Office and the Securities and Exchange Commission alleged several Pacific Northwest residents reaped more than $2.5 million in illegal profits by pumping up penny stocks, including marijuana-related companies.
By Rami Grunbaum
Seattle Times deputy business editor
The Securities and Exchange Commission has charged several Pacific Northwest residents with reaping more than $2.5 million in illegal profits by pumping up two marijuana-related penny stocks and other microcap companies.
Two of the men and an associate in Florida also face criminal charges of securities fraud and conspiracy to launder money stemming from one of the microcap stock promotions, according to the U.S. Attorney’s Office in Seattle.
“The defendants’ manipulative trading created the illusion of an active market in these stocks, which caused the stock price to artificially increase,” the SEC said in a federal civil suit seeking an emergency order to freeze the promoters’ assets and force them to surrender profits deposited overseas.
All were inexpensive, thinly traded stocks in which the promoters conducted prearranged trades and then sold their shares after “aggressive promotional campaigns that urged investors to buy the stocks because the prices were on the verge of rising substantially,” according to the SEC.
The promoters sued by the SEC are Mikhail Galas, 25, and Tovy Pustovit, 20, both of Vancouver, Wash.; Alexander Hawatmeh, 24, of Lincoln City, Ore.; and Christopher Mrowca, 25, of Bradenton, Fla.
Galas, Hawatmeh and Mrowca were also charged by federal prosecutors with manipulating, in 2011 and 2012, the stock of ISM International. “During that period the men accounted for 85% of the trades in the particular stock related to a purported flea market business in Florida,” according to the U.S. Attorney’s Office.
The men sent “fraudulent and misleading ‘blast’ e-mails through promotional websites and email addresses under their control with the intent of increasing demand for the stock,” and then dumped their shares for a profit of $223,000, prosecutors say.
The two stocks related to marijuana are GrowLife, which recently moved its headquarters to Seattle, and Hemp, based in Las Vegas. GrowLife sells lights and other equipment to growers; Hemp says it sells products made with hemp.
The SEC in April suspended over-the-counter trading in GrowLife shares, citing questions “about the accuracy and adequacy of information in the marketplace and potentially manipulative transactions” in its stock. The move was part of a broader effort to squelch penny-stock promotions of companies claiming they will profit from a boom in medical and recreational marijuana.
GrowLife’s new CEO, Marco Hegyi, said in a mid-July interview that it’s working to regain SEC compliance. The civil suit doesn’t allege any wrongdoing by company officials.
The other stocks cited by the SEC along with ISM were Riverdale Oil and Gas, Allied Products Corp and Aden Solutions.
According to the SEC civil case, filed in federal court in Tacoma, Mrowca and Galas engaged in several bouts of coordinated trading in GrowLife, which uses the ticker PHOT.
From January 9 to 14, “as part of a broader promotion of several marijuana-related stock, they allegedly traded 6.4 million shares of GrowLife in “wash trades” designed to mislead others into thinking there was active demand for the stock. During the manipulative trading, “the price of PHOT increased 196% from $.1575 per share to a high of $.467,” says the suit.
Again from March 6 to 18, during another promotional effort using Mrowca’s MoneyRunnersGroup website, they traded about 17 million shares, helping to lift the stock more than 100 percent to nearly 78 cents a share.
They sold their holdings by March 18, pocketing about $134,000 in profits, according to the SEC.
GrowLife shares now trade at 8 or 9 cents.
The defendants could not immediately be reached for comment.
###
"The SEC seeks temporary, preliminary, and permanent injunctions along with an emergency asset freeze, disgorgement, prejudgment interest, financial penalties, and orders barring the promoters from participating in a penny stock offering."
“ Our Microcap Fraud Task Force is taking direct aim at abusive practices and serial violators within the microcap markets like these four promoters seeking to exploit retail investors for personal gain,” said Michael Paley, co-chair of the SEC’s Microcap Fraud Task Force."
“In this case, we meticulously reviewed trading records and developed the evidence necessary to connect these four promoters and their coordinated trading efforts.”
###
Lead Financial Ltd. of Mumbai working through Microcap Innovations was heavily implicated, per Savage DD, in $600K promotional pumpandump of SKTO in April 2014.
SEC suspended AEGY and SKTO because of questions regarding, among other things, the respective company's business activities, the control of the company and the trading in its securities.
###
Washington D.C., Aug. 5, 2014 — The Securities and Exchange Commission today charged four promoters with ties to the Pacific Northwest for manipulating the securities of several microcap companies, including marijuana-related stocks that the agency has warned investors about in recent weeks.
The SEC alleges that the four promoters bought inexpensive shares of thinly traded penny stock companies on the open market and conducted pre-arranged, manipulative matched orders and wash trades to create the illusion of an active market in these stocks. They then sold their shares in coordination with aggressive promotional campaigns that urged investors to buy the stocks because the prices were on the verge of rising substantially. However, these companies had little to no business operations at the time. The promoters reaped more than $2.5 million in illegal profits through their schemes.
Two of the companies manipulated in this case – GrowLife Inc. and Hemp Inc. – claim to be related to the medical marijuana industry. The SEC has issued an investor alert warning about possible scams involving marijuana-related investments, noting that fraudsters often exploit the latest growth industries to lure investors into stock manipulation schemes. Other schemes by these four promoters involved an oil-and-gas company – Riverdale Oil and Gas Corporation – and three other microcap stocks, ISM International, Allied Products Corp, and Aden Solutions.
The SEC was able to unearth the schemes through the work of its recently created Microcap Fraud Task Force.
“Our Microcap Fraud Task Force is taking direct aim at abusive practices and serial violators within the microcap markets like these four promoters seeking to exploit retail investors for personal gain,” said Michael Paley, co-chair of the SEC’s Microcap Fraud Task Force. “In this case, we meticulously reviewed trading records and developed the evidence necessary to connect these four promoters and their coordinated trading efforts.”
The SEC’s complaint filed in federal court in Tacoma, Wash., charges the following individuals:
Mikhail Galas, a stock promoter who lives in Vancouver, Wash.
Alexander Hawatmeh, a member of Worthmore Investments LLC, which owns a stock promotion website called stockhaven.com. He formerly lived in Vancouver and currently resides in Lincoln City, Oregon.
Christopher Mrowca, a stock promoter who operates Money Runners Group LLC, which has an affiliated stock promotion website called MoneyRunnersGroup.com. He lives in Bradenton, Fla.
Tovy Pustovit, who owns a stock promotion website called Explosive Alerts. He also lives in Vancouver.
In a parallel action, the U.S. Attorney’s Office for the Western District of Washington announced criminal charges against Galas, Hawatmeh, and Mrowca.
According to the SEC’s complaint, GrowLife Inc. was part of a broader online promotion of several marijuana-related stocks in early 2014. Mrowca specifically promoted GrowLife through his Money Runners Group website and predicted that the stock price would nearly double. Mrowca, Galas, and Hawatmeh meanwhile engaged in manipulative trading designed to increase the price and volume of GrowLife stock, and they later sold their shares for illicit profits.
Similarly, the SEC alleges that Hawatmeh, Galas, and Mrowca bought and sold approximately 41.7 million shares of Hemp Inc. in January and February 2014 while the stock was actively promoted on the Internet. For example, one Internet tout on February 6 claimed that Hemp could reach “a REAL Possible Gain of OVER 2900%.” During the promotion, Hawatmeh, Mrowca, and Galas engaged in manipulative wash trades and matched orders to manipulate Hemp’s common stock before selling their shares for illegal gains.
“This was a carefully planned operation by Galas, Hawatmeh, Mrowca, and Pustovit to distort the performance of specific penny stocks as they were simultaneously promoted through social media and the Internet. As the companies’ stock prices increased, these four promoters opportunistically dumped their shares for illicit gains,” said Amelia A. Cottrell, associate director in the SEC’s New York Regional Office.
The SEC’s complaint charges Galas, Hawatmeh, Mrowca and Pustovit with violating antifraud provisions of the federal securities laws. The SEC seeks temporary, preliminary, and permanent injunctions along with an emergency asset freeze, disgorgement, prejudgment interest, financial penalties, and orders barring the promoters from participating in a penny stock offering.
The SEC’s complaint names Nadia Hawatmeh as a relief defendant for the purposes of recovering ill-gotten gains in her brokerage account, which was used by the promoters to conduct some of their manipulative trades.
The SEC’s investigation has been conducted by Michael Paley, Eric M. Schmidt, Mona Akhtar, Joseph Darragh, and Tejal Shah. The case was supervised by Ms. Cottrell, and the litigation will be led by David Stoelting. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Western District of Washington, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority.
SEC PR
###
http://seattletimes.com/html/businesstechnolo...ksxml.html
August 5, 2014
SEC, federal prosecutors charge NW promoters with stock manipulation
The US Attorney’s Office and the Securities and Exchange Commission alleged several Pacific Northwest residents reaped more than $2.5 million in illegal profits by pumping up penny stocks, including marijuana-related companies.
By Rami Grunbaum
Seattle Times deputy business editor
The Securities and Exchange Commission has charged several Pacific Northwest residents with reaping more than $2.5 million in illegal profits by pumping up two marijuana-related penny stocks and other microcap companies.
Two of the men and an associate in Florida also face criminal charges of securities fraud and conspiracy to launder money stemming from one of the microcap stock promotions, according to the U.S. Attorney’s Office in Seattle.
“The defendants’ manipulative trading created the illusion of an active market in these stocks, which caused the stock price to artificially increase,” the SEC said in a federal civil suit seeking an emergency order to freeze the promoters’ assets and force them to surrender profits deposited overseas.
All were inexpensive, thinly traded stocks in which the promoters conducted prearranged trades and then sold their shares after “aggressive promotional campaigns that urged investors to buy the stocks because the prices were on the verge of rising substantially,” according to the SEC.
The promoters sued by the SEC are Mikhail Galas, 25, and Tovy Pustovit, 20, both of Vancouver, Wash.; Alexander Hawatmeh, 24, of Lincoln City, Ore.; and Christopher Mrowca, 25, of Bradenton, Fla.
Galas, Hawatmeh and Mrowca were also charged by federal prosecutors with manipulating, in 2011 and 2012, the stock of ISM International. “During that period the men accounted for 85% of the trades in the particular stock related to a purported flea market business in Florida,” according to the U.S. Attorney’s Office.
The men sent “fraudulent and misleading ‘blast’ e-mails through promotional websites and email addresses under their control with the intent of increasing demand for the stock,” and then dumped their shares for a profit of $223,000, prosecutors say.
The two stocks related to marijuana are GrowLife, which recently moved its headquarters to Seattle, and Hemp, based in Las Vegas. GrowLife sells lights and other equipment to growers; Hemp says it sells products made with hemp.
The SEC in April suspended over-the-counter trading in GrowLife shares, citing questions “about the accuracy and adequacy of information in the marketplace and potentially manipulative transactions” in its stock. The move was part of a broader effort to squelch penny-stock promotions of companies claiming they will profit from a boom in medical and recreational marijuana.
GrowLife’s new CEO, Marco Hegyi, said in a mid-July interview that it’s working to regain SEC compliance. The civil suit doesn’t allege any wrongdoing by company officials.
The other stocks cited by the SEC along with ISM were Riverdale Oil and Gas, Allied Products Corp and Aden Solutions.
According to the SEC civil case, filed in federal court in Tacoma, Mrowca and Galas engaged in several bouts of coordinated trading in GrowLife, which uses the ticker PHOT.
From January 9 to 14, “as part of a broader promotion of several marijuana-related stock, they allegedly traded 6.4 million shares of GrowLife in “wash trades” designed to mislead others into thinking there was active demand for the stock. During the manipulative trading, “the price of PHOT increased 196% from $.1575 per share to a high of $.467,” says the suit.
Again from March 6 to 18, during another promotional effort using Mrowca’s MoneyRunnersGroup website, they traded about 17 million shares, helping to lift the stock more than 100 percent to nearly 78 cents a share.
They sold their holdings by March 18, pocketing about $134,000 in profits, according to the SEC.
GrowLife shares now trade at 8 or 9 cents.
The defendants could not immediately be reached for comment.
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