The U.S. Securities and Exchange Commission has accused a Bronxville man of engaging in market manipulation schemes to generate $11.5 million in illegal proceeds from a penny stock.
Joseph A. Fiore, 58, was charged with several securities violations in a lawsuit filed on June 18 in White Plains federal court. The complaint also names two companies he controlled: Berkshire Capital Management Co. in Scarsdale and SPYR Inc., formerly known as Eat at Joe”™s Ltd., in Denver.
The SEC claims he bought and sold stock in Plandai Biotechnology Inc. and concealed related transactions from 2013 to 2014. The Nevada company has offices in London and produces botanical extracts for the pharmaceutical industry.
Fiore”™s attorney, Alexander B. Spiro, was dismissive of the allegations.
“The lawsuit does nothing more than demonstrate a misunderstanding of the transactions at issue,” he said in a brief telephone conversation. “We will answer the allegations in court.”
After acquiring Plandai stock in 2012, the SEC claims, Fiore orchestrated market manipulation campaigns using techniques that have no legitimate business or economic purpose, including scalping, matching, marking the close and printing the tape.
Scalping is the practice of recommending a stock to investors while failing to disclose one”™s intent to sell the same stock. Fiore, the SEC claims, paid at least $2.1 million to email subscription services and websites with names such as “Epic Stock Picks,” “Fast Money Alerts” and “Penny Stock Prophet.”
Fiore directed the promoters, the SEC complaint states, to recommend Plandai stock to investors.
“You have a money-making opportunity with PLPL like no other,” one promoter touted in October 2013, referring to Plandai”™s ticker symbol, “so get in while you can. Go with the experts. Buy PLPL now!”
Matching is the tactic of creating “wash trades” to create the appearance of legitimate market activity. Fiore is accused of buying and selling the same amounts of Plandai stock at the same prices on the same days.
In the “marking the close” scheme, trades are executed at or near the close of the market to artificially inflate the end-of-day share price and create the appearance of active trading. Fiore, the SEC complaint states, set Plandai”™s closing price at least 18 times.
The “painting the tape” deception involves repeated purchases of stock on the same day, artificially inflating the price and creating the appearance of active trading. On July 9, 2013, for instance, Fiore executed seven trades in seven minutes, increasing the share price by 12 percent.
The SEC says Fiore masked his ownership of Plandai stock and concealed his intentions to investors by submitting false reports to brokerage firms and by not filing a mandatory SEC report.
Fiore made trades through six brokerage accounts connected to him, Berkshire or Eat at Joe”™s, the SEC says, often selling Plandai shares on the same day or within a week of the promotions, generating $11,521,778.
The SEC describes Berkshire as a private equity firm that provides financing to penny stock companies. Eat at Joe”™s claimed to develop, own and operate theme restaurants by that name, the complaint states, but only operated a cheesesteak stand at the Philadelphia airport that has since closed.
The SEC is asking the court to bar Fiore and Berkshire from trading in penny stocks, bar Fiore from acting as in officer or director of any company that has registered securities, and order Fiore and his companies to “disgorge all ill-gotten gains they received.”
