SEC Charges Four Individuals in a Microcap Fraud
Litigation Release No. 24472 / May 20, 2019
Securities and Exchange Commission v. David N. Osegueda, Ishmail Calvin Ross, aka Calvin Ross, Zachary R. Logan, and Jessica Snyder, fka Jessica Gutierrez, No. 2:19-cv-04348 (C.D. Cal. filed May 20, 2019)
The Securities and Exchange Commission charged four individuals for their roles in a $1.9 million pump-and-dump scheme in the stock of a public Southern California beverage and cannabis company, Green Cures & Botanical Distribution, Inc.
According to the SEC's complaint, in 2015, Ishmail Calvin Ross of Canoga Park, California secured - but hid - his control of Green Cures behind a figurehead CEO and a front company created by Ross and Jessica Snyder of Avondale, Arizona. At the same time, David N. Osegueda of Sun Valley, California allegedly sold Ross portions of convertible promissory notes, which documented debts owed by Green Cures that could be repaid with the company's stock. Osegueda and Ross converted the debt into shares and hired Zachary R. Logan of La Jolla, California to provide stock promotion services in return for Green Cures shares. Osegueda, Ross, and Logan then deposited their shares into their brokerage accounts. In order to induce the brokerage firm to accept these shares, they made false and misleading statements, including that they were unaware of any promotional campaigns and that they were not working with anyone regarding the stock.
The SEC also alleges that in 2016, the defendants pumped up Green Cures's stock price and trading volume through a promotional campaign, including false and misleading press releases and thousands of emails, text messages, and posts on investor bulletin boards. Osegueda, Ross, and Logan then allegedly dumped their shares onto unsuspecting investors, generating approximately $1.9 million in illicit proceeds.
The SEC's complaint, filed in Los Angeles, charges each defendant with violating the antifraud provisions of Sections 17(a)(1) and 17(a)(3) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint also charges Osegueda, Ross, and Logan with violating the registration and antifraud provisions of Sections 5(a), 5(c), and 17(a)(2) of the Securities Act. The SEC seeks permanent injunctions, disgorgement with prejudgment interest (except as to Snyder), civil penalties, officer and director bars (except as to Logan), and penny stock bars.
The SEC's investigation was conducted by Roberto A. Tercero and supervised by Spencer E. Bendell in the Los Angeles Regional Office. The litigation will be led by Lynn Dean and supervised by Amy Longo. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.