SEC's Case Against Pump-and-Dump Schemers Concludes
Litigation Release No. 24429 / March 20, 2019
Securities and Exchange Commission v. Frank Morelli III and Louis Buonocore, Civil Action No. 15-CV-13396 (D. Mass. Sept. 21, 2015)
United States v. Frank Morelli III, Criminal Action No. 14-cr-00129-JCJ (E.D.PA. March 17, 2014)
United States v. Louis Buonocore, Criminal Action No. 15-cr-10272-LTS (D. Mass. Sept. 21, 2015)
The SEC's case against two defendants who partially settled in 2015 in connection with a pump-and-dump scheme that defrauded investors in YaFarm Technologies Inc., a company that purported to provide stem cell therapy, has concluded after one was sentenced and the other died after pleading guilty in parallel criminal cases.
On July 26, 2018, Frank Morelli, III, of Colorado, was sentenced by U.S. District Court Judge J. Curtis Joyner in federal court in the Eastern District of Pennsylvania to 84 months in prison and three years of supervised release and ordered to pay a fine of $40,000 for a similar pump-and-dump scheme that defrauded investors in the securities of Super Nova Resources, Inc. Morelli had previously pled guilty on April 23, 2014 to one count each of conspiracy, wire fraud, and securities fraud.
The criminal case against his co-defendant in the SEC case, Louis Buonocore, formerly of Massachusetts, was dismissed on October 16, 2018 due to his death. Buonocore had pled guilty on November 17, 2015 to one count of conspiracy and one count of securities fraud for his role in the YaFarm scheme. He had been ordered to forfeit $1,196,357 on August 25, 2016, but had not yet been sentenced.
The SEC's previous settlements with Morelli and Buonocore permanently enjoined them from engaging in further violations of the federal securities laws, prohibited certain stock promotional activity, and barred them from serving as officers and directors of publicly traded companies and from participating in a penny stock offering. The SEC originally had sought disgorgement and penalties in its action, in addition to the other relief obtained, but notified the Court on December 11, 2018 that it was foregoing seeking those remedies in light of Morelli's criminal sentence and Buonocore's death.