SEC charges William A. Justice, Brian D. Shibley, Randell R. Torno, and Keith A. Rosenbaum for their roles in the Phillip Verges $112 million pump-and-dump scheme
On July 1, 2025, the Securities and Exchange Commission (“SEC“) charged William A. Justice, Brian D. Shibley, and Randell R. Torno, each a former Chief Executive Officer (“CEO”) of a penny-stock public company, and Keith A. Rosenbaum, a disbarred California attorney, for their roles in an alleged $112 million pump-and-dump scheme orchestrated by Texas resident Philip Verges.
The SEC previously filed charges against Verges, as well as James D. Tilton, Jr., Robert F. Malin, Linda Malin, and Blue Citi, LLC, on September 26, 2023, for their roles in the alleged scheme, which involved the public securities of Alternet Systems, Inc. (“ALYI”), Priority Aviation, Inc. (“PJET”), Puration, Inc. (“PURA”), Vaycaychella, Inc. (“VAYK”), and WaterPure International, Inc. (“WPUR”).
The SEC’s complaint alleges that, from approximately June 2017 through June 2022, at Verges’ direction, the CEOs (Justice, Shibley and Torno), signed, or allowed their signatures to appear on, disclosure statements published by a penny stock trading platform that they reasonably should have known contained materially false and misleading information regarding who prepared the penny-stock issuers’ financial statements and also concealed Verges’s control of the penny-stock issuers. In particular, according to the SEC, Justice served as the CEO of VAYK, Shibley served as the CEO of PURA, and Torno served as the CEO of ALYI.
In addition, the SEC complaint alleges that, at Verges’s direction, each CEO executed documents that facilitated share issuances to Verges’s nominees, including Verges’ companies, SMEA2Z, LLC and 143 Partners, LLC, and Blue Citi, LLC, a company controlled by Robert F. Malin and Linda Malin, Esq., without exercising reasonable care in inquiring whether the issuances were appropriate and/or accurate. As a result of the CEOs’ actions, Verges’s nominees received more than 4.89 billion shares of stock that were discounted between approximately 77-94% of the prevailing market prices.
The SEC’s complaint further alleges that Rosenbaum authored at least 17 attorney opinion letters for one of Verges’s nominees after being suspended from practicing law in 2019 by the State Bar of California, and subsequently authored at least 73 more opinion letters after being disbarred in 2020. These 90 opinion letters were issued to various transfer agents and facilitated the issuance or transfer of billions of discounted, unrestricted shares to Verges’s nominees.
In addition to their CEO roles mentioned in the July 1, 2025 SEC complaint, we also found that Shibley was the CEO of Nouveau Life Pharmaceuticals Inc. (NOUV), which also involved Philip Verges, and was a director for VAYK, and Torno was a director for WPUR and a former CEO of Restance Inc. (fka ANCE). It is also worth noting, for context, that public records show that Verges even used his daughter’s former roommate, Yasmine Acedo, as a figurehead CEO for PJET in 2017, which evidences the shameless disregard with which he allegedly ran his pump-and-dump scheme.
Justice, Shibley, Torno, and Rosenbaum Settle
Justice, Shibley, and Torno, without admitting or denying the SEC’s allegations, each consented to the entry of final judgments permanently enjoining them from violations of the charged statutes and imposing a penny-stock bar and officer-and-director bar against each. Additionally, Torno was ordered to pay disgorgement of $22,398.08 plus prejudgment interest of $2,011.92, and Torno and Shibley were each ordered to pay a civil penalty of $35,000.
Rosenbaum, without admitting or denying the SEC’s allegations, consented to a bifurcated settlement permanently enjoining him from future violations of the antifraud provision and ordering disgorgement, prejudgment interest, civil penalties, and a penny-stock bar to be resolved upon a motion by the SEC.
The 2023 SEC Complaint
The 2023 SEC complaint against Verges, Robert Malin, Linda Malin, and Blue Citi included two additional issuers that Verges used in his pump-and-dump scheme: Priority Aviation, Inc. (“PJET”) and WaterPure International, Inc. (“WPUR”). According to that complaint, Blue Citi (the Malins) allegedly received 2,565,277,009 shares in the five public companies valued at $47,175,155.96 at the time of issuance, for a total discount of over $40 million.
According to the SEC, after the stock issuances, the Malins directed Blue Citi to sell its shares to third parties who, in turn, would sell the shares into the market at a substantial profit. Blue Citi received nearly $36 million in proceeds through the sale of its shares, paying Verges, through the Verges Companies (SMEA2Z, LLC, 143 Partners LLC, and West Cucharras, LLC), more than $12.5 million.
According to the SEC, Verges facilitated many of these transactions by directly corresponding with the transfer agents of the five public companies using one of his aliases (“Mike Murphy” and “Tom Faye”), and indirectly by instructing the figurehead CEOs of the five public companies, including Justice, Shibley and Torno, to approve share issuances to Blue Citi. We also found many examples of Verges going by the alias “Mike Murphree” (according to internet sources, his mother’s maiden name is Murphree) when writing online promotional material.
James Tilton, the other defendant in the earlier SEC complaint, and a company controlled by Tilton, JDT Trading, LLC, allegedly received 1,163,406,191 shares in three of the public companies valued at $37,166,488.58 at the time of issuance, for a total discount of over $35 million.
Between June 2018 and September 2022, Tilton sold his shares of ALYI, VAYK, and PURA stock and received proceeds of more than $16 million from the sales. Tilton then paid Verges, through the Verges Companies, at least $475,000.
According to the complaint, Verges artificially inflated trading volume in the five public companies to facilitate the share sales by authoring and publishing more than 1,400 press releases between September 2017 and August 2022, some of which were false and misleading, in an effort to ensure that the fraud participants and Verges’s other nominees sustained a market in which to sell their stock. Verges even created an account on InvestorsHub (“IHUB”) under the alias 4weed, where he shared the press releases.
The complaint alleges that the inflated trading volume allowed Verges’s nominees to dump their discounted stock into the market for proceeds of more than $52 million. Those nominees then kicked back at least $19,168,916.30 of their trading proceeds to Verges and his companies.
Verges Indictment
In addition to the SEC charges, Verges was also criminally indicted on December 10, 2024, for his investment fraud scheme involving ALYI, PJET, PURA, VAYK, and WUPR. The indictment alleges that Verges caused approximately $211 million in losses to the public.
Verges is charged with one count of securities fraud and two counts of money laundering. If convicted, he faces a maximum penalty of 20 years in prison on the securities fraud count and 10 years in prison on each money laundering count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Following the criminal indictment, the SEC case against Verges was stayed. The criminal case is ongoing. According to recent court dockets, the case is scheduled to go to trial on June 1, 2026, unless a plea agreement is reached prior to that date.
This article is for informational purposes only. To speak with a Securities Attorney, 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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