Charges Announced Against John Thomas Financial
On August 2, 2017, the Securities and Exchange Commission (“SEC”) announced fraud and other charges against two individuals and John Thomas Financial, a related company, for their roles in a manipulative trading scheme involving Liberty Silver Corp., a penny stock.
The SEC’s complaint, filed on August 1, 2017 in federal district court in New York, alleges that, Robert Genovese, a Canadian citizen, his company, B.G. Capital Group, Ltd. and Abraham Mirman, the former head of investment banking at now-defunct New York broker-dealer John Thomas Financial, Inc. (JTF), were involved in a scheme concerning Liberty Silver in which Genovese sought to increase dramatically the company’s share price and volume and sell millions of shares into the market. According to the SEC’s complaint, between August and October 2012, Genovese schemed with Mirman to sell Liberty Silver shares to John Thomas Financial’s customers in part by agreeing to loan $2 million indirectly to JTF without disclosing the loan to the customers. The complaint alleges that Genovese also touted Liberty Silver in newspaper articles while failing to disclose that he had paid for the articles, that he was dumping millions of shares of Liberty Silver stock, and the financial arrangements between himself and John Thomas Financial. It further alleged that Genovese engaged in manipulative trading on a particular day, increasing Liberty Silver’s share price and creating the false appearance of liquidity and demand for Liberty Silver stock.The SEC’s complaint charges Genovese and B.G. Capital with violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Sections 9(a)(1) and (2) and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint also charges Mirman with violating Sections 5(a), 5(c), and 17(a)(1) and (3) of the Securities Act and with aiding and abetting Genovese’s and B.G. Capital’s violations of Section 17(a)(1) and (3) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5(a) and (c) thereunder. The SEC seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest thereon, and civil penalties.
Separately, on August 1, 2017, Anastasios “Tommy” Belesis, the former CEO of John Thomas Financial, agreed to settle SEC fraud charges. According to the SEC’s order, Belesis misled his customers by soliciting them to purchase Liberty Silver shares beneficially owned by Genovese without disclosing the conflict of interest arising from Belesis’s seeking the $2 million loan from Genovese and that Genovese, a major shareholder, was selling a significant portion of his position. The order finds that Belesis willfully violated Sections 5(a), (c) and 17(a)(2) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Without admitting or denying the findings in the SEC’s order, Belesis agreed to the entry of a cease and desist order, to pay disgorgement of $434,628.40, prejudgment interest of $64,266.86 and a civil penalty of $434,628.40, and to an industry bar.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit www.securitieslawyer101.com. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
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