Two men from Colorado and Massachusetts
have been charged by the Securities and Exchange Commission (SEC) for allegedly engaging in stock manipulation and misleading investors
with false representation of their company.
Frank Morelli III, from Florence, Colorado, and Louis Buonocore, from Woburn,
Massachusetts, have been accused of deceiving customers about their engagement
in the company YaFarm Technologies, which claimed to be a stem cell therapy
company. In addition to the SEC’s charges, the U.S. Attorney’s
Office for the District of Massachusetts also filed criminal information
According to the SEC complaint, Morelli and Buonocore hid the fact that
they owned almost all the stocks in YaFarm Technologies. They are also
accused of concealing how much control they had over the operation and
In 2013, to make YaFarm look like a legitimate company with consistent
and normal operations, Morelli and Buonocore allegedly hired stock promoters
to convince the public all was well. The two men allegedly caused YaFarm
to issue deceptive materials and information to further hide the truth
from investors, including a press release stating that YaFarm will come
into a partnership with the Integrative Stem Cell Institute. Because of
this marketing, the company saw a boost in stock prices and trading volume.
According to the complaint, because of this alleged misrepresentation,
the two men were able to sell their own YaFarm stock for more than $1.2 million.
The SEC seeks to bar Morelli and Buonocore from committing further alleged
violations of securities laws. The two men have agreed to a partial settlement,
subject to court approval, which includes:
- Permanently prohibited from engaging federal securities violations
- Prohibited from participating in some stock promotional activities
- Cannot serve as directors or officers for publicly traded companies
- Cannot participate in penny stock offerings
The SEC is also seeking the return of the alleged illicit profits, with
interest and penalties, which will be litigated.