SEC Charges Neil B. Swartz and Timothy S. Hart
On September 9, 2022, the Securities and Exchange Commission (the “SEC”) announced charges against TBG Holdings Corporation (“TBG”), its principals Neil B. Swartz and Timothy S. Hart, and sales agents Ted L. Romeo, Vincent J. Caputo, and Frank S. Dickerson alleging registration violations for unlawfully selling shares of health management company MediXall Group, Inc. (“MediXall”) to investors.
The SEC’s complaints, filed in U.S. District Court for the Southern District of Florida, allege that, from 2018 through March 2020, TBG and its principals, Swartz and Hart, hired and directed a group of unregistered sales agents to solicit investors to purchase shares of MediXall, a microcap company. According to the complaints, TBG and sales agents Romeo, Caputo, and Dickerson advised investors on the merits of the investments, described the offer to purchase the shares as time-sensitive, provided investors with promotional materials, and raised approximately $3 million by selling MediXall stock to more than 200 investors. As alleged, TBG, Hart and Swartz tracked the sales agents’ investor solicitations, and paid over $500,000 in commissions to the sales agents for their sales of MediXall stock, even though they were not registered as broker-dealers or associated with registered broker-dealers.
The SEC charged the defendants with violations of the broker-dealer registration provisions of Section 15(a)(1) of the Securities Exchange Act of 1934. TBG consented, without admitting or denying the allegations, to an injunction, a $100,000 civil penalty, and a bar for a period of five years from participating in an offering of penny stock. Swartz and Hart each consented, without admitting or denying the allegations, to an injunction, a $50,000 civil penalty, and a bar for a period of five years from participating in an offering of penny stock. Romeo consented, without admitting or denying the allegations, to an injunction, disgorgement of $468,523 with $63,733 in prejudgment interest, a $150,000 civil penalty, and a bar from participating in an offering of penny stock. Dickerson also consented, without admitting or denying the allegations, to an injunction, disgorgement of $25,193 with $3,710 in prejudgment interest, a $25,000 civil penalty, and a bar for a period of three years from participating in an offering of penny stock. The settlements are subject to court approval. In its litigated complaint against Caputo, the SEC is seeking an injunction, a penny stock bar, disgorgement and prejudgment interest, and a civil penalty.
According to our research, Neil Swartz is a long-time veteran in the securities industry. Though not named personally in litigation, a company controlled by Swartz named MCG Partners Inc was named in an SEC enforcement action in 2003 for its role in a pump and dump scheme involving 2DoTrade Inc. According to the SEC complaint, MCG Partners, Inc provided $450,000 to other defendants in the scam (Barry William Gewin, Dominic Roelandt, Louis Van Stillman, and Eric T Landis) for the purchase of an OTC Bulletin Board shell company, which ultimately became 2DoTrade. In exchange for the $450,000, MCG Partners received 1.1 million 2DoTrade shares and a guarantee that other defendants would sustain 2DoTrade’s stock price by touting bogus contracts and exploiting the anthrax scare at the time in a promotional campaign. Under this arrangement, MCG Partners sold 1.1 million shares for approximately $555,191. Several of the defendants were also Indicted for the scheme.
MCG Partners Inc (Neil Swartz) was also the largest shareholder in Kaya Holdings Inc (KAYS) when it went public as GourmetMarket.com, Inc in 1999. After GourmetMarket.com, Inc became TargitInteractive, Inc in 2001, Neil Swartz did some deals with his brother, Mark Swartz, who was the CFO of Tyco International Inc at the time. Tyco was used as a $134m fraud, and Mark Swartz was sentenced in the case, spending 8 years in prison before being paroled in 2013.
To speak with a Securities Attorney about going public or SEC Registration Statements on Form S-1, please contact Brenda Hamilton at 200 E Palmetto Rd, Suite 103, Boca Raton, Florida, (561) 416-8956, or by email at [email protected]. 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.
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Brenda Hamilton, Securities Attorney
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