2022-11-04 sec-litreleases litigation_release 64 KB 2,315 chars

SEC v. David Ferraro; and Justin Costello, No. LR-25572, Western District of Washington (Nov. 4, 2022) — Press Release

raw: Costello et al.

Costello et al., No. 2:22-cv-01388 (Nov. 4, 2022)

Caption
Black v. Davol, Inc.
Source JSON
summary

David Ferraro entered a consent judgment and penny stock bar following SEC charges for his role in a microcap stock promotion scheme with Justin Costello.

paragraph

The SEC charged Ferraro with violating Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act for promoting stocks without disclosing undisclosed compensation and selling intentions. The scheme involving Costello generated approximately $792,000 in trading profits, with Ferraro personally profiting $41,000 from the primary scheme and $68,000 from a separate promotion. Ferraro agreed to a permanent injunction and a bar from penny stock offerings, with final monetary relief to be determined by the court.

narrative

The SEC obtained a consent judgment against David Ferraro for his involvement in microcap stock promotion schemes alongside Justin Costello. Between October 2019 and January 2021, Ferraro promoted at least five microcap stocks to his Twitter followers without disclosing that Costello would pay him a portion of the profits or that both intended to sell shares as prices rose. This scheme generated approximately $792,000 in trading profits for the pair, with Ferraro receiving $32,000 from Costello and earning an additional $41,000 from his own trading. Additionally, Ferraro conducted a separate promotion for two microcap stocks that generated roughly $68,000 in profits. Ferraro was charged with violating Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act, including Rule 10b-5. Without admitting or denying the allegations, Ferraro agreed to a permanent injunction against future violations and a bar from participating in any penny stock offerings. The court will determine the final amount of monetary relief at a later date.

Enriched metadata

Scheme
pump-and-dump (100%)
Court
Western District of Washington
Case No.
2:22-cv-01388
Outcome
settled · 2022-09-29
Victim loss
$792,000
Entity
Costello
Classified pump-and-dump(confidence 100%). EDGAR detection: forms S-8/S-1/424B/8-K· recall 69% / precision 12%. detection rule →
Statutes
Section 17(a) of the Securities ActSection 10(b) of the Securities Exchange ActRule 10b-5
Parties
BlackDavol, Inc.
Keywords
costelloferrarostockstock promotionpromotion schemeschemesec'smicrocappromotionprofitspenny stockmicrocap stocksecurities exchangeprofits ferrarocostello ferraro

Extracted insights

Dollar amounts 4
  • $792K $792,000 $100K–$1M
  • $68K $68,000 $10K–$100K
  • $41K $41,000 $10K–$100K
  • $32K $32,000 $10K–$100K
Entities 7
  • person david ferraro
  • person judge ricardo s. martinez
  • person justin costello
  • person microcap stock promotion scheme
  • agency sec complaint
  • agency sec litigation against justin costello and david ferraro
  • agency Securities and Exchange Commission
Triples 12
  • SEC obtains fraud injunction and penny stock bar against microcap stock promoter
  • Judge Ricardo S. Martinez entered consent judgment against David Ferraro on October 31, 2022
  • Microcap Stock Promotion Scheme generated approximately $792,000 in trading profits for David Ferraro and Justin Costello
  • Justin Costello shared approximately $32,000 of his profits with David Ferraro
  • David Ferraro profited approximately $41,000 from his own trading in the scheme
  • David Ferraro conducted separate stock promotion scheme generating approximately $68,000 profits
  • SEC Complaint charges David Ferraro with violating Section 17(a) of the Securities Act of 1933
  • SEC Complaint charges David Ferraro with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
  • David Ferraro consented to a bifurcated settlement
  • David Ferraro agreed to be permanently enjoined from participating in any offering of a penny stock
  • Pascale Guerrier, Samuel Kalar, and Tian Wen conduct SEC litigation against Justin Costello and David Ferraro
  • Celeste a. Chase and Sheldon L. Pollock supervise the matter
View original SEC litigation releasesec.gov
Extracted body text (2,315c) 
SEC Obtains Fraud Injunction and Penny Stock Bar Against Microcap Stock Promoter Litigation Release No. 25572 / November 4, 2022 Securities and Exchange Commission v. Costello et al., No. 2:22-cv-01388 (W.D. Wash. Filed Sept. 29, 2022) On October 31, 2022, Judge Ricardo S. Martinez of the U.S. District Court for the Western District of Washington entered a consent judgment against David Ferraro for his role in an alleged microcap stock promotion scheme that generated approximately $792,000 in trading profits for Ferraro and Justin Costello. As alleged in the SEC's complaint, this stock promotion scheme was part of a series of frauds that Costello perpetrated while falsely portraying himself to the public as a Harvard-educated military veteran and hedge fund billionaire. According to the SEC's complaint, from at least October 2019 through January 2021, Costello and Ferraro engaged in a stock promotion scheme in which Ferraro recommended and promoted to his Twitter followers and the public at least five microcap stocks that Costello owned, without disclosing that he and Costello intended to sell shares of those stocks as their prices rose, or that Costello would pay Ferraro a portion of his profits from some of those sales. Costello shared approximately $32,000 of his profits with Ferraro, and Ferraro profited approximately $41,000 from his own trading in this scheme. The SEC's complaint also alleges that Ferraro separately conducted his own stock promotion scheme respecting two additional microcap stocks, generating profits of approximately $68,000. The SEC's complaint, filed on September 29, 2022, charges Ferraro with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Without admitting or denying the allegations in the complaint, Ferraro consented to a bifurcated settlement, agreeing to be permanently enjoined from violations of the charged provisions and from participating in any offering of a penny stock. Monetary relief will be determined by the court at a later date upon motion of the Commission. The SEC's litigation against Costello and Ferraro is being conducted by Pascale Guerrier, Samuel Kalar, and Tian Wen. The matter is being supervised by Celeste A. Chase and Sheldon L. Pollock.
OCR text (2,315c · html-text · 99% conf) 
SEC Obtains Fraud Injunction and Penny Stock Bar Against Microcap Stock Promoter Litigation Release No. 25572 / November 4, 2022 Securities and Exchange Commission v. Costello et al., No. 2:22-cv-01388 (W.D. Wash. Filed Sept. 29, 2022) On October 31, 2022, Judge Ricardo S. Martinez of the U.S. District Court for the Western District of Washington entered a consent judgment against David Ferraro for his role in an alleged microcap stock promotion scheme that generated approximately $792,000 in trading profits for Ferraro and Justin Costello. As alleged in the SEC's complaint, this stock promotion scheme was part of a series of frauds that Costello perpetrated while falsely portraying himself to the public as a Harvard-educated military veteran and hedge fund billionaire. According to the SEC's complaint, from at least October 2019 through January 2021, Costello and Ferraro engaged in a stock promotion scheme in which Ferraro recommended and promoted to his Twitter followers and the public at least five microcap stocks that Costello owned, without disclosing that he and Costello intended to sell shares of those stocks as their prices rose, or that Costello would pay Ferraro a portion of his profits from some of those sales. Costello shared approximately $32,000 of his profits with Ferraro, and Ferraro profited approximately $41,000 from his own trading in this scheme. The SEC's complaint also alleges that Ferraro separately conducted his own stock promotion scheme respecting two additional microcap stocks, generating profits of approximately $68,000. The SEC's complaint, filed on September 29, 2022, charges Ferraro with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Without admitting or denying the allegations in the complaint, Ferraro consented to a bifurcated settlement, agreeing to be permanently enjoined from violations of the charged provisions and from participating in any offering of a penny stock. Monetary relief will be determined by the court at a later date upon motion of the Commission. The SEC's litigation against Costello and Ferraro is being conducted by Pascale Guerrier, Samuel Kalar, and Tian Wen. The matter is being supervised by Celeste A. Chase and Sheldon L. Pollock.

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