Additional Key South Florida-Based Microcap Fraudsters Settle with SEC in Multi-Defendant Litigation
Litigation Release No. 24765 / March 11, 2020
Securities and Exchange Commission v. Barry Honig, et al., 18 Civ. 08175 (S.D.N.Y. filed September 7, 2018)
On March 9, 2020, the U.S. District Court for the Southern District of New York entered final consent judgments against defendants Michael Brauser, John O'Rourke III, John Stetson, Grander Holdings, Inc., ATG Capital LLC and Stetson Capital Investments Inc. (SCI) and a partial consent judgment against HS Contrarian Investments LLC (HSCI) in an ongoing civil action in which the SEC alleges that numerous individuals and associated entities participated in microcap schemes that generated over $27 million from unlawful stock sales.
According to the SEC's complaint, filed September 2018 and amended on March 8, 2019, a group of South Florida-based microcap fraudsters led by Barry Honig, who entered into a bifurcated settlement with the SEC in July 2019, along with his close associates O'Rourke and Stetson, and longtime co-investor Brauser, manipulated the stock of three public companies in classic pump-and-dump schemes. The complaint alleges that the defendants repeatedly artificially boosted the stock price of these companies and then profited when they dumped their shares into the inflated market. Brauser, O'Rourke and Stetson also used their corporate entities Grander, ATG, SCI and HSCI in these schemes.
The court entered consent judgments enjoining Brauser, Stetson, O'Rourke, Grander, ATG, SCI and HSCI from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, as well as the reporting provisions of Section 13(d) of the Exchange Act and Rule 13d-1(a) thereunder. In addition, the judgments enjoin Brauser and Grander from violating the securities registration provisions of Sections 5(a) and (c) of the Securities Act, and enjoin O'Rourke and ATG from violating the anti-manipulation provisions of Sections 9(a)(1) and 9(a)(2) of the Exchange Act. Further, the judgments include permanent penny stock bars and conduct-based injunctions for Brauser, Grander, O'Rourke and ATG and 10-year penny stock bars and conduct-based injunctions for Stetson, SCI and HSCI. Finally, the judgments order Brauser, O'Rourke and Stetson to pay disgorgement, prejudgment interest and civil penalties totaling $1,175,176, $1,153,326, and $1,154,669, respectively. Monetary remedies against HSCI will be determined by the court at a later date upon motion of the SEC. The defendants neither admitted nor denied the SEC's allegations.
For further information, see Press Release No. 2018-182, September 7, 2018, Litigation Release No. 24262, September 7, 2018, Litigation Release No. 24431, March 22, 2019 and Litigation Release No. 24529, July 12, 2019.