SEC Charges Four Individuals in Microcap Fraud Scheme Targeting Retail Investors
Litigation Release No. 25529 / September 28, 2022
Securities and Exchange Commission v. Matthew Nicosia, William Reninger, Fabrizio Di Carlo, and Ronald Touchard, Civ. Action, o. 1:22-cv-05761 (E.D.N.Y. filed September 27, 2022)
The Securities and Exchange Commission today charged four individuals with running microcap fraud schemes targeting retail investors. The defendants were variously involved in different parts of fraudulent schemes involving three separate publicly-traded companies that generated $9.1 million in illicit stock sale proceeds.
According to the SEC's complaint, from August 2019 to at least September 2020, defendants Matthew Nicosia, William ("Rocky") Reninger, Fabrizio Di Carlo, and Ronald Touchard worked with others to fraudulently sell stock in microcap companies by making misleading statements during high pressure sales calls and/or email promotions. The SEC alleges that, as part of the scheme, Touchard introduced the other defendants to Di Carlo, who ran a boiler room that identified potential investors and pressured them to purchase stock in Odyssey Group International Inc. According to the complaint, Nicosia and Reininger were Odyssey insiders working with an individual previously charged by the SEC, Charlie Abujudeh, to dump Odyssey shares during the promotional campaigns they were funding. The SEC alleges that the promotions were deceptive and failed to disclose that Nicosia and Reininger were Odyssey insiders, controlled nearly all of the stock that was deposited and available for public trading, and were selling their Odyssey stock into the increased demand created by the promotions they were funding and controlling. According to the complaint, the defendants shared the profits from over $2.6 million in illicit stock sales. The SEC alleges that Nicosia and Reininger similarly funded the promotion of Scepter Holdings, Inc. stock and failed to make key disclosures to investors to whom they sold Scepter stock, making approximately $3.5 million in illicit proceeds. The SEC alleges that Nicosia perpetuated the same scheme with CannaPharmaRx, Inc. stock and made approximately $3.3 million in illicit stock sale proceeds.
The SEC's complaint charges Nicosia, Reininger, Di Carlo, and Touchard with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Nicosia and Reininger are also charged with violating the registration provisions of Section 5(a) and 5(c) of the Securities Act. The SEC is seeking permanent injunctions, return of allegedly ill-gotten gains with prejudgment interest, civil penalties, and a penny stock bar as to all defendants, and an officer and director bar as to Nicosia and Reininger.
Investors can find additional information about pump-and-dump scams, including the warning signs of fraud, on Investor.gov. The Office of Investor Education and Advocacy and Enforcement's Retail Strategy Task Force have also issued Investor Alerts about these types of fraud, including Frauds Targeting Main Street Investors -- Investor Alert, Investor Alert: Fraudulent Stock Promotions, Investor Alert: Don't Invite Investment Scams to Find You, and Investor Alert: Beware of Stock Recommendations on Investment Research Websites.
The SEC's investigation was conducted by Nita Klunder, David D'Addio, Trevor Donelan and Paul Block of the Boston Regional Office. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.