SEC Charges New York Penny Stock Financier with Fraudulent Market Manipulation and Scalping Scheme
Litigation Release No. 24171 / June 20, 2018
Securities and Exchange Commission v. Joseph A. Fiore, Berkshire Capital Management Company, Inc., and Eat at Joe's, Ltd. (n/k/a SPYR, Inc.), No. 7:18-cv-05474 (S.D.N.Y. filed June 18, 2018)
On June 18, 2018, the Securities and Exchange Commission charged Joseph A. Fiore, a penny stock financier based in Bronxville, New York, and two companies that he controlled for their respective roles in a fraudulent market manipulation and scalping scheme that generated over $11 million from unlawful stock sales.
According to the SEC's complaint, filed in federal district court for the Southern District of New York, Fiore manipulated the market and illegally sold the stock of microcap issuer, Plandai Biotechnology, Inc. The complaint alleges that Fiore financed and directed a promotional campaign that included recommendations to buy Plandai stock without disclosing that Fiore beneficially owned Plandai stock, intended to sell and was selling millions of shares, comprising a substantial portion of his Plandai stock holdings, into the public market. The complaint further alleges that Fiore engaged in manipulative trading through two companies he controlled, Berkshire Capital Management Company, Inc. ("Berkshire") and Eat at Joe's, Ltd. ("EAJ"), made false and misleading statements to brokerage firms through which he traded Plandai stock, and failed to disclose his beneficial ownership of more than five percent of the outstanding shares of Plandai stock. Finally, the complaint alleges that EAJ failed to register as an investment company with the Commission.
The SEC's complaint charges Fiore and Berkshire with violating Section 17(a) of the Securities Act of 1933 ("Securities Act") and Sections 9(a), 10(b), and 20(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. The complaint also charges Fiore with violating Section 13(d) of the Exchange Act and Rule 13d-1 thereunder and EAJ with violating Sections 17(a)(1) and 17(a)(3) of the Securities Act, Sections 9(a) and 10(b) of the Exchange Act and Rules 10b-5(a) and 10b-5(c) thereunder, and Section 7(a) of the Investment Company Act of 1940. The SEC seeks permanent injunctions, disgorgement of ill-gotten gains along with prejudgment interest, and financial penalties against all of the defendants; penny stock bars against Fiore and Berkshire; and an officer and director bar against Fiore.
The SEC's investigation was conducted by Drew M. Dorman, Jason Litow, and Kevin Gershfeld. The case was supervised by Yuri B. Zelinsky and Antonia Chion. Chyhe Becker and Scott Walster in the SEC's Division of Economic and Risk Analysis assisted in the investigation. The SEC's litigation will be led by John Bowers and Paul Kisslinger and supervised by Cheryl Crumpton. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.