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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23743 / February 7, 2017

Securities and Exchange Commission v. Michael Affa, et al., No. 14-cv-12959 (D. Mass. filed July 11, 2014)

United States v. Michael Affa, et al., No. 1:14-cr-10221 (D. Mass.)

Massachusetts Federal Court Sentences Three Defendants in SEC Microcap Manipulation Case

The Securities and Exchange Commission announced that the final three defendants in a microcap manipulation case were sentenced. On February 2, 2017, a federal court in Boston, Massachusetts sentenced Andrew Affa, of Huntington Station, New York, to one day in prison (time already served), three years of supervised release with 12 months to be served in home confinement, and ordered him to pay a fine of $100,000. On December 12, 2016, the court sentenced Christopher Putnam, of Charleston, South Carolina, to one year and one day in prison and 24 months of supervised release and ordered him to pay a fine of $50,000. On October 19, 2016, the court sentenced Christopher Nix, of Hilton Head, South Carolina, to 18 months in prison and 36 months of supervised release and ordered him to pay a fine of $100,000. Affa, Putnam and Nix pleaded guilty in September 2015 to criminal charges of conspiracy, securities fraud and wire fraud for their participation with two other defendants in a pump-and-dump scheme in the securities of Boston-based Amogear Inc.

The criminal case was announced the same day as the SEC filed fraud charges against Affa, Nix, Putnam, and the other two defendants for attempting to manipulate shares of Amogear that was caught by an FBI undercover operation. According to the SEC's complaint filed in federal court in Boston, the defendants knew that Amogear was a shell company without any real operations but schemed to boost its price and profit by selling their own shares. What the defendants did not know was that the FBI controlled Amogear and used it to obtain evidence of attempted stock manipulation. To protect investors, on February 10, 2014, the SEC suspended trading in Amogear's securities as the attempted stock manipulation was underway.

In March 2016, the federal court in the SEC's case entered judgments by consent against all five defendants, enjoining them from violating Section 17(a)(1) and (3) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder, and prohibiting them from participating in any offering of penny stock, pursuant to Section 21(d)(6) of the Exchange Act.

Mitchell Brown and Michael Affa, the two co-defendants of Andrew Affa, Putnam, and Nix, also were sentenced, respectively, in June 2016 to 42 months in prison and 3 years of supervised release (for two separate criminal cases), and in February 2016 to 33 months in prison. Both were also ordered to pay a fine of $1 million and Brown was ordered to pay restitution of $420,643.

For further information, see Litigation Release Nos. 23576 (June 21, 2016); 23495 (Mar. 23, 2016); 23469 (Feb. 17, 2016); Press Release No. 2014-135 (July 11, 2014); and Exchange Act Release No. 71514 (Feb. 10, 2014).

 

https://www.sec.gov/litigation/litreleases/2017/lr23743.htm


Modified: 02/07/2017