SEC Charges Unregistered Dealers Alexander Dillon, Cosmin Panait, Larry Adams and Salvador Rosillo

SEC Charges Unregistered Dealers Alexander Dillion and Cosmin Panait

On Friday, August 13th, the Securities and Exchange Commission (the “SEC”) filed charges against GPL Ventures LLC, GPL Management LLC, Alexander J. Dillon, Cosmin I. Panait (the “GPL Defendants”), HempAmericana, Inc, Salvador E. Rosillo, Seaside Advisors, LLC, and Lawrence B. Adams (aka Larry Adams).

Dillon, a 32-year-old resident of New Jersey, and Panait, a 35-year-old New York resident and Romanian citizen, co-own and control GPL Ventures LLC and GPL Management LLC. The duo also co-own and controls Blackbridge Capital LLC, a toxic lending company mirroring GPL Ventures.

Lawrence Adams, a 66-year-old New Jersey resident, owns Seaside Advisors LLC, a New Jersey entity that touts itself as a consulting firm that helps public companies find favorable funding.

The SEC Complaint alleges that since 2017, the GPL Defendants have been operating as unregistered dealers by privately acquiring large blocks of stock in approximately 140 microcap issuers and publicly selling those blocks into the market for their own account, generating gross proceeds of at least $81 million.

The Complaint further alleges that, as part of their ongoing dealer registration violations, GPL Defendants secretly funded stock promotion activity in the microcap issuers they were trading — illegal conduct known as “stock scalping.”

GPL Defendants’ scalping activities included providing funding to HempAmericana in exchange for unregistered shares of its stock. The GPL Defendants then required HempAmericana and its CEO, Rosillo, to split the offering proceeds with Seaside Advisors. As a result, Rosillo transferred funds to Seaside Advisors and its CEO, Lawrence Adams, as well as to another individual, to finance the GPL Defendants’ unlawful scalping and covert promotional activities.

HempAmericana provided misleading public disclosures about its use of the funds received from the GPL Defendants. Seaside Advisors and Lawrence Adams, as well as another individual, hired others to promote HempAmericana. Those promotions failed to disclose that the GPL Defendants funded the promotions and that the GPL Defendants intended to sell HempAmericana stock while Seaside Advisors and Lawrence Adams were paying promoters to recommend that investors purchase the stock.

The SEC also alleges that the GPL Defendants committed securities fraud by lying to broker-dealers about their involvement in the scalping scheme.

More Details About the HempAmericana Scheme

The HempAmericana scheme can be summarized as follows: (1) the GPL Defendants repeatedly acquired stock purportedly sold pursuant to the Regulation A registration exemption, conditioned on a portion of the stock sales proceeds being sent by the issuer to Seaside; (2) Seaside then paid Individual A, a professional stock promoter; (3) Individual A hired promoters, or middlemen, who in turn hired other promoters, to promote the stock; (4) the GPL Defendants sold the stock during the promotional campaigns, which did not disclose that the promotions were indirectly funded by the issuer, and HempAmericana, using the proceeds received from the GPL Defendants, the most significant purchaser in the issuer’s qualified Regulation A offerings, or that the GPL Defendants intended to sell their large stock holdings during the promotion.

Additionally, in order to deposit and sell their HempAmericana shares, the GPL Defendants misrepresented to their stockbrokers that they were not involved in the promotional activity.

Further, the “Use of Proceeds” representations in HempAmericana’s Regulation A circular misleadingly failed to disclose that significant portions of the stock sales proceeds would be used for stock promotion.

More on Seaside’s Involvement

The GPL Defendants conditioned their investment in HempAmericana on the company hiring Seaside Advisors to promote the company’s stock.

To this end, Dillon introduced Salvador Rosillo to Lawrence Adams and Individual A and required that Rosillo hire Seaside Advisors as a “consultant” with the express understanding that Seaside Advisors, in turn, would sub-contract Individual A to undertake a wide-ranging promotional campaign to enable the GPL Defendants to sell their shares at a profit.

While HempAmericana publicly disclosed retaining Seaside Advisors as a consultant, Adams’ use of Individual A had the effect of distancing HempAmericana and the GPL Defendants from the funding of the promotional activity.

Early on in the scheme, the GPL Defendants directed the specific split of offering proceeds between HempAmericana and Seaside Advisors.

For example, in August 2017, when the GPL Defendants purchased 16 million shares of stock for $80,000, the funds went to a HempAmericana escrow account from which Dillon then provided instructions for $50,000 to be sent to HempAmericana and $30,000 to be sent to Seaside Advisors.

Once Seaside received the GPL Defendants’ money through HempAmericana, it forwarded varying amounts, but generally more than half, to Individual A for promotional activity.

Overall, of the $7.4 million in stock purchase proceeds that the GPL Defendants paid to HempAmericana during the scheme, $2.18 million was paid by HempAmericana to Seaside Advisors, and Seaside, in turn, forwarded nearly sixty percent of it to Individual A.

We identified 5 issuers that hired Seaside Advisors and Adams, which also included the GPL Defendants :

We also found that the five Issuers used the same main group of stock promoters:

  • Charlie Abujudeh (who was recently charged by the SEC and Indicted)
  • Abraham Abu (Charlie’s brother)
  • Sam Joudeh (Charlie’s other brother)
  • Chris Benz
  • Paul Benz (Chris’s brother)
  • Kathy Benz (Paul’s wife)
  • Allan Smethers (Chris’s long-time associate)

Other Issuers that employed Adams and/or Seaside Advisors LLC included: Odyssey Group Inc (ODYY), which was one of the Issuers named in the Abujedah litigation, Sugarmade Inc (SGMD), Tiger Reef Inc (TGRR), The 4 Less Group Inc (FLES), and SPO Global Inc (SPOM).

The Informants

Testimony was provided to the SEC by Richard Edelson. Edelson, who also runs Get OTC Current, was intimately involved as the financial officer for at least four of the Issuers during the stock scalping schemes (HMPQ, GDET, IMTL, and GTEH) and as a financial consultant for the GPL Defendants since 2015. In particular, Edelson was the financial officer for HempAmericana Inc from January 2017 until August 2021, which covered the entire period that the SEC alleges that the stock scalping scheme was taking place.  According to the SEC Complaint, Edelson was introduced to the issuers by the GPL Defendants as an in-house accountant to assist with preparing the issuers’ financial statements. According to the SEC, those financial statements and other company disclosures were used to mislead investors about the use of the funds received from the GPL Defendants, hiding the fact that funds provided by the GPL Defendants were used to pay for stock promotions. 

Edelson shared information with the SEC about the bank accounts and brokerage accounts used by the GPL Defendants and gave details about how the GPL Defendants often tricked issuers into modifying the original notes so that the GPL Defendants would be given more favorable terms.

Another cooperating individual was former GPL Ventures employee Soham Awon. Awon, who worked under Dillon and Panait from 2016 to June 2021, testified about how the GPL Defendants used a call room (often filled with college interns) to seek out financially struggling issuers with aged debt and offer to provide new funding in exchange for issuing large blocks of stock to GPL Ventures. Awon further detailed the process for turning that new funding into discounted free trading stock and how Dillon and Panait would often renegotiate the notes to obtain better conversion terms and even steeper discounts to the market price, subsequently selling those shares into the market using investor relations firms and stock promotions to generate interest in the stock.

It should be noted that besides participating in the schemes as paid employees, both Richard Edelson and Soham Awon received a large block of shares as “consultants” for HempAmericana Inc on February 2, 2018,  which was during the period that the alleged stock scalping scheme was taking place, putting them in a position to profit off of the illegal activities before they decided to come forward and provide information against the defendants in the case. According to an attorney letter filed for that period, Edelson received his stock for accounting services, and Awon received his for web development services.

Soham Awon is also listed as receiving shares in Image Protect Inc on October 20, 2017, at the same time that the GPL Defendants were ravaging the issuer with debt conversions. 

Tri-Bridge Ventures LLC

Tri-Bridge Ventures LLC is another significant player that shows up repeatedly in the GPL Defendant/Seaside Advisor issuers.

Like GPL Ventures and BlackBridge Capital, Tri-Bridge Ventures is a toxic financier whose business is the purchase and sale of securities on a regular basis. Publicly filed documents reflect that Tri-Bridge is run by John Forsythe III and shares the same office space as GPL Ventures and BlackBridge Capital in New York.

Tri-Bridge Ventures provided funding in all five of the GPL/Seaside issuers (HMPQ, GDET, IMTL, GTEH, and AEPT) and in dozens of the same issues at the same time as GPL Ventures and/or Blackbridge Capital.

There is an undeniable connection between the GPL Defendants and Tri-Bridge Ventures, which was confirmed by Forsythe III in a deposition from October 30, 2018, from a separate civil lawsuit filed by a BlackBridge investor named Maneesh Awasthi in the Supreme Court of the State of New York Southern District.

According to Forsythe, Tri-Bridge was formed in April 2016 at the same time as Blackbridge Growth Fund after Forsythe and Dillon discussed the idea of having a 50/50 profit-sharing venture (50% of Tri-Bridge’s profits go to the Blackbridge Fund). Forsythe was willing to take such a deal because he claimed that he was struggling financially at the time after a failed solar energy venture. In exchange for his willingness to share half of his profits with Blackbrige, Tri-Bridge got free office space and access to the Blackbridge service providers, including Soham Awon, who was the office administrator at the time.

Knowing these facts raises the possibility of additional securities violations. Since Tri-Bridge and BlackBridge are partner companies, and GPL and Blackbridge are under common control, Tri-Bridge, Blackbridge, and GPL are acting as a trading group and, therefore, may have, on several occasions, violated securities laws by holding more than 10% of the O/S jointly in the issues that they all provided financing.

Final Words

Toxic funding causes enough damage to issuers and their shareholders without including stock promotions, stock scalping, stock manipulation, and kickback schemes.  

If you are an issuer or investor who is a victim of a toxic convertible note lender, please contact Hamilton & Associates Law Group LP at (561) 416-8956 or by email [email protected]

 


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 [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 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.

Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
165 E, Palmetto Park, Second Floor
Boca Raton, Florida 33432
Telephone 561-416-8956