SEC charges California man with running a micro-cap stock fraud scheme that targeted retail investors

SEC
  • The SEC charged Charlie Abujudeh with running microcap stock fraud schemes targeting retail investors.
  • According to the SEC, Abujudeh generated over $9 million in illicit proceeds relating to the scheme.
  • The “linchpin” of Abujudeh’s schemes was that he controlled nearly all of the float for each of the companies that he promoted, the SEC said.
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The US Securities and Exchange Commission filed an emergency action charging a California man with running microcap stock fraud schemes targeting retail investors, the regulator said Thursday.

According to the SEC’s complaint, Charlie Abujudeh worked alongside others to fraudulently sell a number of microcap stocks to retail investors in companies including Scepter Holdings, Odyssey Group International, and CannaPharamRX Inc between August 2019 and September 2020.

Abujudeh and his associates sold the microcap stocks to investors by making misleading statements during high pressure sales calls and email promotions, the SEC said.

He generated over $9 million in illicit proceeds by selling shares of those companies to investors during the promotions he funded, the SEC said.

As part of the scheme, Abujudeh paid stock promoters to hype up Odyssey stock over the phone to “unsuspecting retail investors,” and used emailed promotional campaigns to draw attention to the stocks, the SEC said.

According to the complaint, the “linchpin” of Abujudeh’s schemes was that he controlled nearly all of the float, or stock available for public trading, for each of the companies that he promoted.

“This control enabled him to manipulate the market for these securities using a variety of deceptive tactics, most often through deceptive promotional campaigns that he funded and controlled,” the SEC said.

He also allegedly funneled hundreds of thousands of dollars of the illegal Odyssey stock sale proceeds to an Odyssey insider with whom he had been coordinating.

The complaint was filed in the US District Court for the Eastern District of New York. Abujudeh was charged with violating the antifraud and registration provisions of the federal securities laws.

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The SEC has awarded nearly $200 million to individual whistleblowers in 2021, beating its annual record

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The Securities and Exchange Commission has given out nearly $200 million in rewards to whistleblowers in 2021, surpassing its annual record.

The regulator awarded $500,000 to a whistleblower on Monday bringing this year’s total number of award recipients to 40 individuals, another record, according to a press release.

The most recent whistleblower action “allowed the Commission and another agency to quickly file actions, shutting down an ongoing fraudulent scheme.” Specific details on the “fraudulent scheme” or the whistleblower’s identity weren’t revealed by the SEC.

The SEC has now awarded roughly $760 million to 145 individuals since issuing its first award in 2012.

The goal of the whistleblower program at the SEC is to “minimize the harm to investors, better preserve the integrity of the United States’ capital markets, and more swiftly hold accountable those responsible for unlawful conduct.”

The Office of the Whistleblower was established by Congress on July 21, 2010 in Section 922 of the Dodd-Frank Act.

Whistleblowers are eligible for an award under the act if they voluntarily provide the SEC with “original, timely, and credible information” that leads to a “successful enforcement action.” Awards for whistleblowers can range from 10%-30% of the money collected when sanctions exceed $1 million.

Payments to whistleblowers are made out of an investor protection fund established by Congress. The fund is financed entirely through “monetary sanctions paid to the SEC by securities law violators.”

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