SEC Settles with Two Additional Defendants in Boiler Room Scheme

Litigation Release No. 24906 / September 21, 2020

Securities and Exchange Commission v., Inc., et al., No. 17 Civ. 04133 (E.D.N.Y. filed July 12, 2017)

On September 17, 2020, the U.S. District Court for the Eastern District of New York entered final consent judgments against two individuals charged for their roles in a $10 million boiler room scheme.

The SEC's complaint, filed on July 12, 2017, alleged Emin Cohen, Dennis Verderosa, and others, engaged in a fraudulent scheme using threatening and deceitful sales tactics to pressure retail investors to purchase penny stocks. The defendants used information they learned about the victims' purchase orders to facilitate the placement of opposing sell orders to dump shares owned by participants in the fraudulent scheme.

In a parallel criminal action, Cohen and Verderosa pleaded guilty. Cohen and Verderosa were sentenced to 24 and 72 months in prison, respectively, followed by three years' supervised release.

The final consent judgments enjoin Cohen and Verderosa 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, and the broker-dealer registration provision of Section 15(a) of the Exchange Act. The final judgments order Cohen and Verderosa to disgorge $136,373 and $383,344 respectively, plus prejudgment interest, all of which is deemed satisfied by the forfeiture and restitution ordered in the parallel criminal action. The judgments also impose penny stock bars. These judgments follow the June 11, 2020 announcement of final judgments obtained by consent against three other defendants in the case. In a separate settled administrative proceeding, Cohen was barred from the securities industry.

The SEC's continuing investigation is being conducted by Cecilia B. Connor and Andrew Elliott and supervised by Carolyn M. Welshhans and Amy L. Friedman, with assistance from Leigh Barrett. The SEC's litigation is being handled by James Smith and Matthew Scarlato and supervised by Jan Folena. The SEC appreciates the assistance of the U.S. Attorney's Office for the Eastern District of New York, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority.