SEC Charges Two Individuals in $17 Million MicroCap Manipulation Scheme
Yesterday, the SEC announced fraud and other charges against two individuals and a related company for their roles in a manipulative trading scheme involving Liberty Silver Corp. (OTC: LBSV), a penny stock.
The SEC’s complaint, alleges that, Robert Genovese, a Canadian citizen, his company, B.G. Capital Group, Ltd. and Abraham “Avi” Mirman, the former head of investment banking at now-defunct New York broker-dealer John Thomas Financial, Inc. (JTF), were involved in a scheme concerning Liberty Silver in which Genovese sought to increase dramatically the company’s share price and volume and sell millions of shares into the market.
According to the SEC’s complaint, between August and October 2012, Genovese schemed with Mirman to sell Liberty Silver shares to JTF’s customers in part by agreeing to loan $2 million indirectly to JTF without disclosing the loan to the customers. The complaint alleges that Genovese also touted Liberty Silver in newspaper articles while failing to disclose that he had paid for the articles, that he was dumping millions of shares of Liberty Silver stock, and the financial arrangements between himself and JTF. It further alleged that Genovese engaged in manipulative trading on a particular day, increasing Liberty Silver’s share price and creating the false appearance of liquidity and demand for Liberty Silver stock.
Separately, on August 1, 2017, Anastasios “Tommy” Belesis, the former CEO of JTF, agreed to settle SEC fraud charges. According to the SEC’s order, Belesis misled his customers by soliciting them to purchase Liberty Silver shares beneficially owned by Genovese without disclosing the conflict of interest arising from Belesis’s seeking the $2 million loan from Genovese and that Genovese, a major shareholder, was selling a significant portion of his position. Without admitting or denying the findings in the SEC’s order, Belesis agreed to the entry of a cease and desist order, to pay disgorgement of $434,628.40, prejudgment interest of $64,266.86 and a civil penalty of $434,628.40, and to an industry bar.
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