U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23541 / May 16, 2016
USA v. Richard Weed, Case No. 1:14-cr-10348-DPW (D. Mass.)
Securities and Exchange Commission v. Richard Weed, et al., Civil Action No. 1:14-cv-14099 (D. Mass. filed Nov. 6, 2014)
California Attorney Convicted by Massachusetts Jury of Securities Fraud in Scheme to Manipulate Stock of Sports Ticket Broker
The Securities and Exchange Commission announced today that on May 16, 2016, a jury in federal court in Boston, Massachusetts returned a guilty verdict against Richard Weed, a partner in a Newport Beach, California law practice. The jury in the criminal trial convicted Weed of securities fraud, wire fraud, and conspiracy to commit those offenses in connection with a pump-and-dump scheme that defrauded investors in CitySide Tickets Inc., a Massachusetts-based ticket brokering business. He will be sentenced by the court at a later date.
The allegations in the criminal indictment against Weed stem from the same conduct alleged in the SEC's complaint against Weed and two other defendants. According to the SEC's complaint, filed in federal court in Boston on November 6, 2014, Weed facilitated a scheme to pump and dump CitySide's stock. The SEC alleges that Weed helped structure CitySide into a publicly traded company through reverse mergers, created backdated promissory notes and authored false legal opinion letters that enabled two other defendants in the SEC's action - Thomas Brazil and Coleman Flaherty - to obtain millions of purportedly unrestricted shares of stock in the company. Investors were then blitzed with a false and misleading promotional campaign touting CitySide as a budding national leader on the verge of acquiring smaller ticket firms across the country and positioning itself as an attractive takeover target for California-based Ticketmaster Entertainment LLC, a large company in the business of selling and reselling tickets to entertainment events. As the company's stock price increased on the false hype, Brazil and Flaherty sold their shares to unsuspecting investors, realizing illicit proceeds of approximately $3 million, and Weed earned substantial legal fees for his role in the scheme. Shortly thereafter, the market for CitySide's stock collapsed and the company eventually went out of business.
The SEC's action, which is pending, seeks disgorgement of ill-gotten gains plus pre-judgment interest and penalties as well as penny stock bars and permanent injunctions against further violations of the securities laws. The SEC also seeks to bar Weed from serving as an officer or director of any public company.