SEC Charges Florida Man in Multimillion Dollar Microcap Securities Fraud Case
On January 2nd, 2019, the Securities and Exchange Commission (SEC) announced securities fraud charges against six individuals. Through a web of interconnected companies, these defendants are alleged to have generated more than $35 million in proceeds in illegal stock sales. One of the defendants, Aaron Dale Wise, is a resident of Florida. Below, our Miami investment fraud attorneys provide an overview of the charges.
Microcap Stock Fraud: Six Defendants, Several Companies
According to the complaint filed by the SEC in the United States District Court for the Southern District of New York, the securities fraud scheme at stake in this case occurred between July of 2015 and June of 2019. During that time, six defendants (Steve M. Bajic, Rajesh Taneja, Anthony Killarney, Kenneth Ciapala, Christopher McKnight, and Aaron Dale Wise) used a large network of foreign companies to carry out microcap securities fraud. In total, the SEC believes that 45 different microcap stocks were affected by the $35 million investment fraud scheme.
How the Fraud Worked: An Example
In court documents, federal regulators offer an example of how the investment fraud operation worked. In 2012, a New York-based company called Blake Insomnia Therapeutics (Blake) issued more than 10 million shares—with approximately 1 million shares being issued to 35 unrelated investors through a private securities offerings and another 9 million shares being issued to four individuals for “services rendered” to the company.
Eventually, the foreign-based entities controlled by the defendants managed to obtain virtually all of Blake’s outstanding shares. Though it appeared that these shares were controlled by several independent parties, they were actually all being held by companies owned by the defendants. As a result, they were able to sidestep the SEC’s disclosure requirements. With concealed control over the stock, they got Blake to issue nearly 21 million new restricted shares in 2014.
Florida Resident Aaron Dale Wise Helped Facilitate the Fraud
Notably, Aaron Dale Wise, of Florida, is the only American citizen listed in this complaint. The SEC alleges that Mr. Wise played a key part in the larger securities fraud scheme by assisting the other defendants and helping them conceal the source of funds that were used to pay for stock promotions. Mr. Wise is facing charges for aiding and abetting stock fraud.
In its emergency action, the SEC is seeking several different remedies and sanctions against the defendants. Among other things, the SEC is seeking permanent injunctions against the defendants and their companies, payment of restitution, disgorgement of any ill-gotten gains, and other financial penalties.
Call Our Miami, FL Securities Fraud Attorneys for Immediate Guidance
At Carlson & Associates, P.A., our Florida investment fraud attorneys are committed to helping investors recover financial compensation for illegitimate securities losses. If you or your family member sustained losses in a microcap fraud scheme, we can help. Call us now for a confidential review of your case. With a law office in Miami, Carlson & Associates, P.A. represents investors throughout South Florida.
Resources:
sec.gov/news/press-release/2020-1
sec.gov/litigation/complaints/2020/comp-2020-1-bajic.pdf