Alexander Dillon: Penny Stock Fraud Scheme Came To An End

Posted on 12/25/2023

Broader Topic: Cosmin I. Panait
Sentiment: Negative

The Securities and Exchange Commission (SEC) has taken decisive action against an issuer, its CEO, Alexander J. Dillon and Cosmin I. Panait, and several entities and individuals implicated in a penny stock fraud scheme. This enforcement action, announced today, sheds light on a complex web of deceptive practices that have allegedly been ongoing since at least July 2017. The SEC's complaint, filed in the United States District Court for the Southern District of New York, outlines the charges and the emergency relief sought to halt the ongoing misconduct.

The core of the SEC's complaint revolves around GPL Ventures, which is accused of purchasing over 1.5 billion shares of HempAmericana Inc. stock through a Regulation A offering. The SEC asserts that GPL Ventures had an agreement that HempAmericana would utilize a portion of the offering proceeds to covertly finance stock promotions. These promotions were designed to enable GPL Ventures to sell its HempAmericana shares at a profit. The SEC contends that HempAmericana misled investors about the use of the offering proceeds.

The complaint also alleges that Seaside Advisors and Lawrence Adams, among others, played a role in this scheme. Specifically, they are accused of paying a stock promoter who, in turn, funded promotions of HempAmericana’s stock. Notably, these promotions failed to disclose both HempAmericana's involvement in financing and GPL Ventures' intention to unload its shares during these promotions. The SEC claims that approximately $11 million in illegal profits were generated through this fraudulent activity.

Further allegations are directed at GPL Ventures' owners, Alexander Dillon and Cosmin Panait. The SEC contends that they falsely represented to their brokers that GPL Ventures was not involved in any stock promotions related to the shares they were depositing and selling into the market. Additionally, GPL Ventures, along with affiliate GPL Management LLC, Dillon, and Panait, are accused of operating as unregistered securities dealers. It's claimed that they privately obtained discounted stock in over 140 microcap issuers, subsequently reselling such stock to the public at a substantial profit, generating at least $81 million.

Richard R. Best, Director of the SEC's New York Regional Office, emphasized the importance of investors receiving accurate and complete information about the use of proceeds from Regulation A offerings and the identity of those funding stock promotions. The SEC is seeking various remedies, including disgorgement of ill-gotten gains, civil penalties, permanent injunctive relief, and penny stock and officer and director bars against various defendants.

The investigation is ongoing, demonstrating the SEC's commitment to pursuing those who engage in fraudulent schemes in the financial markets. The SEC acknowledges the assistance of the Financial Industry Regulatory Authority (FINRA) in this matter.

This enforcement action underscores the SEC's dedication to maintaining the integrity of the securities market and protecting investors from fraudulent activities. As the investigation progresses, the SEC aims to hold the accused accountable for their alleged misconduct, sending a clear message that deceptive practices will not be tolerated in the financial industry. The outcome of this case will likely have broader implications for regulatory oversight and enforcement within the penny stock market, emphasizing the need for transparency and compliance with securities laws.

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