SEC Obtains $15 Million Judgment Against Mastermind of Market Manipulation and Unlawful Stock Distribution Scheme
Litigation Release No. 24896 / September 14, 2020
Securities and Exchange Commission v. Francisco Abellan Villena, Guillermo Ciupiak, James B. Panther, Jr., and Faiyaz Dean, No. 18-civ-04309 (S.D.N.Y. filed May 15, 2018)
On September 11, 2020, the Honorable P. Kevin Castel of the U.S. District Court for the Southern District of New York entered a default judgment against Francisco Abellan Villena, ordering him to pay $15 million for his role in a fraudulent stock sale scheme that caused significant harm to retail investors.
The SEC's complaint, filed on May 15, 2018, alleged that Abellan masterminded a scheme where he and his co-defendants hid their ownership and sales of microcap issuer Biozoom, Inc. shares by using sham purchase agreements, a network of nominees, anonymizing techniques, and other deceptive practices. Abellan also allegedly employed sophisticated manipulative trading techniques to artificially inflate Biozoom's share price, and executed an extensive promotional campaign to coincide with the trading. The alleged scheme culminated in the defendants' illegal sales of Biozoom, which netted them over $33 million in unlawful proceeds.
In granting the SEC's motion for default judgment against Abellan, the Court permanently enjoined Abellan from violations of the antifraud and registration provisions of the federal securities laws and ordered him to pay a $15 million civil penalty.
In a prior action, the SEC obtained a court order in 2013 freezing proceeds from the unlawful Biozoom sales. It subsequently obtained a default judgment and established a fair fund, which has returned over $16 million to harmed investors. The SEC also previously charged a lawyer and officer of Biozoom's predecessor entity, as well as two registered representatives for their roles in the unregistered sales of Biozoom stock, and a brokerage firm for supervisory and recordkeeping failures. On November 27, 2019, the Court in the current action entered a default judgment against defendant Faiyaz Dean, a Canadian lawyer, in which he was ordered to pay a $160,000 civil money penalty. The SEC previously obtained a judgment against Abellan for his role in another market manipulation scheme.
The SEC's investigation was conducted by Jennie B. Krasner and Marc E. Johnson, under the supervision of Deborah A. Tarasevich. The litigation is being conducted by Daniel Maher and Duane K. Thompson, and supervised by Stephan J. Schlegelmilch. The SEC appreciates the assistance of the Federal Bureau of Investigation, the U.S. Department of Justice, Fraud Section, Criminal Division, the Financial Industry Regulatory Authority, the British Columbia Securities Commission, the Comision Nacional del Mercado de Valores of Spain, the Cyprus Securities and Exchange Commission, the Hong Kong Securities and Futures Commission, the Ontario Securities Commission, and the Supertendencia del Mercado de Valores of Panama.