The Securities and Exchange Commission today announced that it has obtained an asset freeze and other emergency relief to halt a series of microcap market manipulation schemes that defrauded retail investors.
According to the SEC’s complaint, from 2013 to 2019, the defendants engaged in various schemes to manipulate microcap stocks and defraud retail investors, obtaining a total of over $6 million in illicit profits.
First, as alleged in the complaint, from at least 2013 to 2017, defendants Ongkaruck Sripetch, Amanda Flores, and Brehnen Knight with assistance on certain occasions from attorney Ashmit Patel orchestrated numerous fraudulent “scalping” schemes.
According to the complaint, they purchased stock in over-the-counter issuers through various entities that they controlled, funded promotional campaigns recommending that investors buy those stocks, and then sold the stocks when their price and trading volume were inflated by those same unlawful promotional campaigns.
The complaint also alleges that, from 2013 to 2016, Sripetch and Flores along with Dominic Williams and several entities controlled by Sripetch sold over 24 million shares of a microcap issuer they controlled and promoted. According to the complaint, these sales were not registered with the Commission or exempt from registration.
Second, the complaint alleges that in 2016, Sripetch, and Knight engaged in manipulative trading by executing matched trades and wash orders to create a fictitious, attractive price and volume trading history to prime the market in advance of a promotional campaign for a microcap stock.
Third, the complaint alleges that in 2018 and 2019, Sripetch and Knight along with Michael Wexler and Andrew McAlpine, planned and implemented pump-and-dump manipulations of the stock of a microcap issuer controlled by Wexler. According to the complaint, Sripetch and McAlpine were able to sell approximately 340,000 shares before the SEC suspended trading.
“As we alleged in the complaint, the defendants created a sophisticated network that enabled them to engage in multiple fraudulent schemes, making millions of dollars in unlawful profits at the expense of retail investors,” said Richard Best, Regional Director of the SEC’s New York Regional Office. “Among other things, the emergency relief we obtained will prevent defendants from doing further damage to these investors, and require them to provide an accounting.”
The SEC alleges that Flores, Knight, Sripetch, McAlpine, Wexler, and their companies, Adtron Inc., ATG Inc., DOIT Ltd., Doji Capital Inc., King Mutual Solutions Inc., Optimus Prime Financial Inc., Orca Bridge, Redline International, and UAIM Corporation violated the antifraud provisions of the federal securities laws and that Patel aided and abetted certain of those violations.
The SEC also alleges that Knight and Sripetch violated the anti-manipulation provisions of the federal securities laws and that Sripetch, Flores, Williams, DOIT, Doji, Optimus, Redline, and UAIM violated the registration provisions of the federal securities laws. The SEC seeks permanent injunctions, disgorgement plus prejudgment interest, civil penalties, and penny stock bars against the individual defendants as well as officer-and-director bars against Knight and Flores.
The Honorable Marilyn L. Huff of the U.S. District Court for the Southern District of California granted the SEC’s request for a temporary restraining order and other emergency relief against defendants Sripetch, Flores, Knight and Patel as well as an asset freeze against Sripetch, Knight and Patel. Judge Huff scheduled a hearing for Oct. 5, 2020.
The U.S. Attorney’s Office for the Southern District of California yesterday announced criminal charges against Sripetch, Wexler, Patel and McAlpine in a parallel criminal case.
The SEC’s investigation was conducted by Kristine M. Zaleskas, and Michael Paley in the New York Regional Office. The litigation will be led by Christopher J. Dunnigan and Ms. Zaleskas. The case is being supervised by Lara S. Mehraban.
The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of California, the Federal Bureau of Investigation, the Financial Industry Regulatory Authority, and the Alberta Securities Commission.