U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23624 / August 23, 2016
Securities and Exchange Commission v. Richard Weed et al., No. 1:14-cv-14099 (D. Mass. Nov. 6, 2014)
USA v. Richard Weed, 1:14-cr-10348-DPW (D. Mass.)
USA v. Coleman Flaherty, 1:14-cr-10330-PBS (D. Mass.)
USA v. Thomas Brazil, Case No. 1:14-cr-10329-RGS (D. Mass.)
Three Sentenced in Scheme to Manipulate Stock of Massachusetts-based Sports Ticket Broker
On August 22, 2016, June 8, 2016, and June 2, 2016, respectively, Richard Weed, Coleman Flaherty III, and Thomas Brazil were sentenced for their roles in defrauding investors in CitySide Tickets Inc., a Massachusetts-based ticket brokering business.
Weed, a partner in a Newport Beach, California law practice, was sentenced by U.S. District Judge Douglas Woodlock to 4 years in prison and three years of supervised release and ordered to pay a fine of $100,000 and to forfeit $90,000. Restitution to be paid by Weed will be determined at a later date. Flaherty was sentenced by Chief U.S. District Judge Patti Saris to one year of probation, to be served in home confinement, and ordered to pay a fine of $10,000. Restitution to be paid by Flaherty will be determined by the court on September 23, 2016. Flaherty was previously ordered to forfeit $1,350,734. Brazil was sentenced by U.S. District Judge Richard Stearns to one day in prison, three years of supervised release, and ordered to pay restitution in the amount of $231,140. Brazil was previously ordered to forfeit $1,519,213. Brazil and Flaherty each had pleaded guilty to one count of conspiracy, one count of securities fraud, and one count of wire fraud in December 2014, and both cooperated with the criminal authorities and subsequently testified in a related criminal trial of Weed prosecuted by the Massachusetts U.S. Attorney. On May 16, 2016, a jury returned a guilty verdict against Weed for conspiracy to commit securities fraud and wire fraud, securities fraud, and seven counts of wire fraud.
The allegations in the criminal cases against Weed, Flaherty, and Brazil stem from the same conduct alleged in the SEC's complaint against them. According to the SEC's complaint, filed in federal court in Boston on November 6, 2014, Weed helped structure CitySide into a publicly traded company through reverse mergers, created backdated promissory notes and authored false legal opinion letters that enabled Flaherty and Brazil 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 Tickets 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. The complaint further alleges that as the company's stock price increased on the false hype, Flaherty and Brazil sold their shares to unsuspecting investors for illicit proceeds of approximately $3 million. Shortly thereafter, the market for CitySide Tickets stock collapsed and the company eventually went out of business.
The SEC's pending action against Weed, Brazil and Flaherty seeks from all defendants 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.