Court Enters Judgment Against Microcap Company and Two Promoters in Pump-And-Dump Scheme
Court Enters Judgment Against Microcap Company and Two Promoters in Pump-And-Dump Scheme
This week, 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.
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