Court Enters Judgment Against Microcap Company and Two Promoters in Pump-And-Dump Scheme, Ordering Each Promoter to Pay Over $4.6 Million
Litigation Release No. 24398 / February 12, 2019
Securities and Exchange Commission v. Jason McDiarmid, et al., No. 17-civ-07201-SVW (C.D. Cal. filed Sept. 29, 2017)
The Securities and Exchange Commission has obtained final judgments against a microcap company and its two undisclosed promoters who were charged with running a $3.3 million microcap fraud.
In September 2017, the SEC charged Jason McDiarmid, Kenneth George Cedric Telford, and Stop Sleep Go, Inc., formerly known as Interactive Multi-Media Auction Corp, with running a pump-and-dump scheme in Interactive Multi-Media's stock. The complaint alleged that McDiarmid and Telford took Interactive Multi-Media public and then orchestrated a promotional campaign touting its stock while they dumped their shares, selling them through nominees. McDiarmid and Telford made approximately $3.3 million in profits.
On October 25, 2018, the U.S. District Court for the Central District of California entered a judgment by default against McDiarmid. On November 19, 2018, the court entered a judgment against Telford and a judgment by default against Interactive Multi-Media. Telford previously consented to the entry of the judgment without admitting or denying the allegations of the complaint. The judgments permanently enjoin McDiarmid, Telford, and Interactive Multi-Media 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 permanently enjoin McDiarmid and Telford from violating the registration provision of Section 5 of the Securities Act. The judgments against McDiarmid and Telford bar each of them from serving as an officer or director of a public company and from participating in any offering of a penny stock. The judgment against McDiarmid orders him to pay $3,177,268 in disgorgement, $291,035 in prejudgment interest, and a civil penalty of $1,644,766. The judgment against Telford orders him to pay $3,316,235 in disgorgement, $302,871 in prejudgment interest, and a civil penalty of $1,644,766.
The SEC's investigation was conducted by Roberto Tercero and supervised by Spencer Bendell. The SEC's litigation was handled by Amy Longo, Donald Searles, and Mr. Tercero. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.