NEWS: Two Men Charged with Conducting Stock Fraud
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 against Buonocore.
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 misleading investors.
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.