The Securities as well as also Exchange Commission announced on Friday charges against a group of 10 individuals as well as also their associated entities for long-running fraudulent schemes which brought in over $27 million.
The SEC called those charged “microcap fraudsters” in a press Discharge.
Two of those charged were John O’Rourke, CEO of Riot Blockchain, as well as also Barry Honig, once Riot’s largest shareholder. The charges are not related to Riot Blockchain, as well as also which is actually not named or referenced within the complaint. Both O’Rourke as well as also Honig are based in south Florida.
“Honig was the primary strategist, calling upon different Defendants to buy or sell stock, arrange for the issuance of shares, negotiate transactions, or engage in promotional activity,” according to the SEC complaint. “In each scheme, Honig orchestrated his as well as also his associates’ acquisition of a large quantity of the issuer’s stock at steep discounts, either by acquiring a shell as well as also executing a reverse merger or by participating in financings on terms highly unfavorable to the company.”
The SEC brought the action for “three highly profitable ‘pump-as well as also-dump’ schemes perpetrated by Honig, [John] Stetson, [Michael] Brauser, [John] O’Rourke, [Mark] Groussman, as well as also [Phillip] Frost, as well as also their entities,” the complaint alleged. Frost is actually a well-known biotech investor as well as also founded Opko Health.
CNBC reached out to all those named within the complaint. Groussman said, “No comment.” The different defendants were not immediately available.
The SEC also alleges the defendants arranged as well as also paid for stock promotion.
“Honig then directed O’Rourke to write a promotional article, which O’Rourke published under the pseudonym ‘Wall Street Advisors’ on Seeking Alpha,” the complaint said. “[O’Rourke] also knowingly as well as also falsely claimed ‘not receiving compensation'” for writing the article.
In another instance cited by the SEC, John Ford, also a defendant, allegedly failed to disclose in an article promoting a stock which he had been compensated by Honig for writing the article, with Honig selling him below-market shares.
Riot Blockchain is actually a cryptocurrency company whose stock cost skyrocketed after which changed its name.
Riot’s stock was down more than 24 percent on the news.