Antonio Katz, a defendant in ongoing SEC litigation, pled guilty to criminal charges filed by the U.S. Attorney for the District of Massachusetts. Katz was charged with one count of conspiracy and one count of securities fraud in connection with a pump-and-dump scheme that defrauded investors in Greenway Technology, a Las Vegas based company purporting to operate resorts catering to gay and lesbian travelers.
The court accepted Katz’s plea and his sentencing currently is scheduled to occur on February 16, 2018.
The SEC previously charged Katz and Jehu Hand on December 10, 2015.
According to the SEC’s complaint, the defendants and their co-schemers secretly planned and orchestrated the sale of Greenway stock to the public without proper securities registration statements and at prices artificially inflated by news releases, promotional materials, or blast e-mails containing false, exaggerated or misleading information, and by engaging in undisclosed coordinated trading of the stock.
“These efforts were designed to generate the appearance of demand for the stock and to increase its price even though Greenway had no operations or assets at the time,” the SEC says.
Between August 2012 and January 2013, after the stock price had been pumped, the participants in the scheme sold more than 12 million net shares of Greenway stock, causing losses to the investing public of more than $850,000.
The SEC’s litigation against Katz and Hand continues. The SEC’s complaint seeks disgorgement of ill-gotten gains from the scheme plus interest and penalties as well as penny stock bars and permanent injunctions against further violations of the securities laws.
New Jersey Man Pleads Guilty to Federal Charges in Investment Scam
The Honorable William J. Martini of the U.S. District Court for the District of New Jersey entered a judgment against defendant James R. Trolice that imposed permanent injunctions and an officer and director bar.
The SEC’s complaint alleged that Trolice and Lee P. Vaccaro pocketed the approximately $6 million they raised from more than 100 investors for limited liability companies they owned and controlled that purportedly held warrants to purchase the common stock of a technology startup company.
The complaint further alleged that Trolice lured investors by showcasing his apparent wealth and hosting elaborate investor parties at his multi-million-dollar home. He also touted his purported track record of bringing startup companies public and obtaining high returns for investors. Meanwhile, Trolice allegedly used investor funds to pay his mortgage along with other bills for a credit card, car lease, college tuition and landscaping.
On April 4, 2017, Trolice pled guilty to federal criminal charges for securities fraud and money laundering in a parallel criminal action before the District Court for the District of New Jersey in United States v. Trolice. Sentencing is scheduled for July 20, 2017.
Nationwide Fined $65K for Email Malfunction
Nationwide Fund Distributors LLC and Nationwide Investment Services Corporation were censured and jointly and severally fined $65,000 by FINRA for failing to properly reload two of their email servers.
Without admitting or denying the findings, the firms consented to the sanctions and to the entry of findings that two out of the firms’ 87 email servers were not properly reloaded with an email retention and supervision program after a standard server refresh.
According to FINRA, the system was not reloaded on the two servers due to human error.
Nationwide Investment Services Corporation, who maintained and administered the system, first discovered the issue as part of an internal compliance review of emails. Upon discovery, the firm identified the extent of the issue and took steps to recover emails that were potentially lost.
Despite these efforts, approximately 547,000 emails were lost due to the error over a nine-month period, and the emails of representatives from both firms were impacted. The fact that the firm self-reported to FINRA, and took steps to identify and correct technical deficiencies, was considered in determining appropriate sanctions.