The Securities and Exchange Commission (SEC) chalked up a significant milestone in its ongoing efforts to combat securities fraud.
The U.S. District Court for the Southern District of New York issued final judgments in a case involving former Cool Holdings Inc. chairman Andrew DeFrancesco and two other individuals accused of engaging in fraudulent filings and a pump-and-dump scheme.
A Stock Fraud Case
According to the SEC's complaint filed on January 6, 2023, DeFrancesco played a central role in a fraudulent scheme that involved false statements and omissions of material information in SEC filings. These filings concealed Cool Holdings' precarious financial situation and misled investors about its future prospects.
Additionally, DeFrancesco secretly funded the publication of fraudulent promotional articles about the company, reported Green Market Report. “DeFrancesco founded SOL Global Investments Corp. SOLCF SOL but resigned from the company as its CEO and board member in April 2022,” wrote Debra Borchardt.
See Also: SOL Global Reduces Net Loss In Q1 FY23 By $47M, Here Are The Details
The court found DeFrancesco guilty of being the "chief architect" of the scheme and ordered him to pay disgorgement and prejudgment interest totaling $1,276,070.49. He also faces a civil penalty of $1,737,224.52. DeFrancesco has been barred from serving as an officer or director of any public company.
Final judgments were also issued against two other defendants in the case: Nikola Faukovic, who allegedly assisted DeFrancesco in executing the fraudulent scheme, has been ordered to pay disgorgement and prejudgment interest totaling $14,350.32, along with a civil penalty of $111,614. Catherine DeFrancesco, DeFrancesco's ex-wife was slapped with a civil penalty of $122,782. Both defendants are permanently enjoined from violating securities laws in the future.
The SEC's litigation against the remaining defendants, Marlio Mauricio Diaz Cardona and Carlos Felipe Rezk is ongoing. The commission's legal team, comprised of attorneys from the New York Regional Office, the Home Office and the Retail Strategy Task Force continues to pursue justice in the case.
Cannabis investors and the general public should take note of these developments as they underscore the importance of conducting due diligence, verifying information and being cautious when making investment decisions.
All of this and more will be discussed at the Benzinga Cannabis Capital Conference in Chicago this Sept 27-28. Get your tickets today before prices increase and secure a spot at the epicenter of cannabis investment and branding.
Read More: SEC Charges 6 Individuals, 2 Companies For Cannabis Stock Promotion Scheme
Photo: Courtesy Of Daniel Lloyd Blunk-Fernández On Unsplash
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