SEC v. Barry C. Honig; John Stetson; Michael Brauser; John R. O'Rourke III; Mark Groussman; Phillip Frost, et al., No. 1:18-cv-08175, Southern District of New York (Sept. 7, 2018) — Complaint

SANJAY WADHWA
SENIOR
ASSOCIATE REGIONAL
DIRECTOR
Michael Paley
Charu
Chandrasekhar
Nancy
Brown
Katherine
Bromberg
J
on Daniels
Attorneys for
Plaintiff
SECURITIES
AND EXCHANGE
COMMISSION
New
York Regional Office
200 Vesey Street,
Suite 400
New
York, New York
10281-1022
(212) 336-1023
(Brown)
U
NITED STATES
DISTRICT COURT
S
OUTHERN DISTRICT OF NEW
YORK
S
ECURITIES
AND EXCHANGE
COMMISSION,
Plaintiff,
-- against --
BARRY C. HONIG,
JOHN STETSON,
MICHAEL
BRAUSER, JOHN R.
O'ROURKE III,
MARK
GROUSSMAN,
PHILLIP FROST,
ROBERT LADD,
ELLIOT MAZA, BRIAN
KELLER,
J
OHN H.
FORD, ALPHA
CAPITAL ANSTALT, ATG
C
APITAL LLC, FROST
GAMMA INVESTMENTS
TRUST, GRQ
CONSULTANTS, INC.,
HS
CONTRARIAN INVESTMENTS,
LLC,
G
RANDER HOLDINGS, INC.,
MELECHDAVID,
INC., OPKO
HEALTH, INC.,
S
OUTHERN
BIOTECH,
INC.,
and
STETSON
CAPITAL
INVESTMENTS INC.,
Defendants.
X
18 Civ. (  )
ECF CASE
C
OMPLAINT
A
ND JURY DEMAND
-
----------------------------------------------------------------------
x
P
laintiff Securities
and
Exchange
Commission ("Commission"),
for
its Complaint
against
Defendants Barry C.
Honig ("Honig"),
John Stetson ("Stetson"), Michael
Brauser ("Brauser"),
John R.
O'Rourke III ("O'Rourke"),
Mark
Groussman ("Groussman"), Phillip Frost ("Frost"),
Robert
Ladd ("Ladd"), Elliot Maza
("Maza"),
Brian Keller ("Keller"), John H. Ford ("Ford"),

Alpha
Capital Anstalt ("Alpha"), ATG Capital LLC ("ATG"),
Frost
Gamma
Investments Trust
("FGIT"),
GRQ Consultants, Inc. ("GRQ"), HS
Contrarian
Investments, LLC
("HSCI"), Grander
Holdings, Inc.
("Grander"), Melechdavid, Inc. ("Melechdavid"),
OPKO Health, Inc. ("Opko"),
S
outhern Biotech, Inc.
("Southern Biotech"),
and
Stetson Capital Investments Inc.
("SCI")
(
collectively, "Defendants"), alleges as follows:
S
UMMARY OF ALLEGATIONS
This case involves
three highly profitable
"pump
-and
-dump" schemes
perpetrated by
Honig, Stetson, Brauser, O'Rourke, Groussman, and Frost, and
their entities
G
RQ, SCI, Grander,
HSCI,
Melechdavid, ATG,
Opko, FGIT, and
Southern Biotech from
2013
t
hrough 2018 in the stock of three public companies
(Company A, Company B, and
Company
C)
that, while
enriching Defendants by millions of dollars, left
retail investors holding virtually
worthless shares.
2. Across all three schemes,
Honig
was
the primary strategist, calling upon
other
Defendants to buy
or sell stock, arrange for the issuance
of
shares,
negotiate transactions, or
e
ngage in
promotional
activity.
In each scheme, Honig orchestrated his and
his
associates'
a
cquisition of a large quantity
of
the issuer's
stock at steep discounts,
either
by
acquiring
a
shell
and
executing
a
reverse merger or by
participating in financings on terms
highly
unfavorable to
the
company. In every scheme,
Honig,
and soiree
combination of Stetson,
Brauser,
O'Rourke,
G
roussman and Frost, either
explicitly or tacitly agreed to buy, hold or
sell their
shares
in
c
oordination with one
another, knowing
that a
pump and dump was in the
offing
that would
allow
them all to profit
handsomely.
Once
Honig and his associates had secured
substantial
o
wnership of
the
issuer, they acted as an undisclosed
control group, directing the issuer's
management for
their benefit, including orchestrating transactions designed
to create market
2

interest in the company or to solidify their control.
To profit from their investment, in each scheme, Honig and his
associates
would arrange and pay for the promotion of the stock, directing their co-defendant Ford, or
a
similar
promoter,
to write favorable and
materially misleading
articles about the
company
whose
stock price they wanted to inflate. In several instances, to magnify the intended boost to volume
and price
that would follow a promotional
article's
release, Honig, Brauser, O'Rourke,
G
roussman, Melechdavid
and ATG engaged
in pre-release manipulative trading to
generate a
misleading
picture
of
market interest
in
the
company's stock, priming investor
interest.
4. In connection with
the
Company B
and
Company
C schemes,
Honig, Brauser,
Stetson, O'Rourke, Frost and Groussman, as well as
certain of their
entities, also violated
b
eneficial ownership reporting requirements of the federal securities laws by failing to disclose
t
heir
group
beneficial ownership of
shares and the fact
that
as a group they
were looking
to
exercise (and, in fact, did exercise) control over the issuers.
Management of both Company A and Company B acted to further the
schemes. Defendants Maza
(Company
A's CEO),
Keller (Company
A's
Chief
Scientific
Officer
and a
Director)
and Ladd
(Company
B's CEO), acted
separately
at the
direction of Honig
and his
confederates to take steps
beneficial
to that group at the expense
of each
company's public
shareholders, and signed public filings they knew to be false to hide the group's beneficial
o
wnership
and existence.
6. Maza and
Keller
signed
Company
A's public filings,
in which
they
knowingly
or
recklessly
omitted to disclose the share ownership as a group
of Honig,
Brauser, Frost,
S
tetson, and Groussman, or the size
of
each of their holdings.
Similarly,
Company B's CEO,
Ladd,
also signed false public filings, making material misstatements in them
about the
3

substantial
group
ownership of Company B
shares
held by
Honig,
Brauser, Stetson, O'Rourke,
and
Groussman.
7.
All
told,
the three schemes brought Defendants millions of dollars: Company
A's pump and dump generated
for
the Defendants more
than $9.25 million in stock sales
p
roceeds, and
Company B's pump and dump generated more
than
$9.5 million. And
their
most
recent venture, the
pump and dump scheme with respect to
Company
C, brought in over $8.3
million in stock sales proceeds.
In the wake of
these
schemes, public investors were left holding
virtually worthless
stock.
VIOLATIONS
8. By virtue of the conduct alleged
herein, each of the
Defendants,
directly or
i
ndirectly, singly or in concert, violated and are otherwise liable
for
violations
of
the
federal
securities laws as follows:
9.
Honig violated:
• Sections
5(a) and (c) of the Securities Act of 1933 ("Securities Act") [15
U.S.C. §§ 77e(a) and (c)];
•
Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)];
• Sections
9(a)(1)
and
(2) of
the Securities Exchange
Act of 1934 ("Exchange
Act") [15.U.S.C. §§ 78i(a)(1) and (2)];
• Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule lOb-5
t
hereunder
[17
C.F.R. § 240.10b-5]; and
•
Section
13(d)
of
the Exchange Act
[15 U.S.C. § 78m(d)], and Rule 13d-1(a)
t
hereunder
[17
C.F.R. § 240.13d-1(a)].
1
0.
Stetson violated:

• Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)];
•
Section
10(b) of the Exchange Act [15 U.S.C. §  78j(b)], and Rule lOb-5
thereunder [17 C.F.R. § 240.1Ob-5]; and
• Section
13(d)
of
the Exchange Act [15 U.S.C. § 78m(d)], and Rule 13d
-1(a)
thereunder
[17
C.F.R. §
240.13d-1(a)].
11. Brauser
violated:
• Sections 5(a) and (c) of the Securities Act [15 U.S.C. §§ 77e(a) and
(c)];
•
Section
17(a)
of
the Securities Act [15 U.S.C. §  77q(a)];
• Section 9(a)(1) of
the Exchange Act [15.U.S.C. §
78i(a)(1)];
• Section 10(b) of the Exchange Act [15
U.S.C. § 78j(b)], and Rule lOb-5
t
hereunder
[17 C.F.R. § 240.1Ob-5]; and
• Section 13(d) of
the Exchange Act [15 U.S.C. § 78m(d)], and Rule 13d-1(a)
thereunder [17 C.F.R. § 240.13d-1(a)].
12. O'Rourke
violated:
•
Section
17(a)
of
the Securities Act [15 U.S.C. §  77q(a)];
• Sections 9(a)(1)
and
(2) of
the Exchange Act [15.U.S.C. §§ 78i(a)(1) and (2)];
• Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and
Rule lOb-5
t
hereunder
[17 C.F.R. § 240.1Ob-5]; and
•
Section
13(d)
of
the Exchange Act [15 U.S.C. § 78m(d)], and Rule 13d
-1(a)
thereunder [17 C.F.R. §
240.13d-1(a)].
13. Groussman violated:
• Sections 5(a) and (c)
of
the Securities Act [15 U.S.C. §§ 77e(a) and (c)];
• Section 9(a)(1) of
the Exchange Act [15 U.S.C. §  78i(a)(1)];
5

• Section 13(d) of the
Exchange
Act [15 U.S.C. § 78m(d)],
and Rule
13d-1(a)
thereunder [17 C.F.R. §  240.13d-1(a)]; and
• Section 15(b)
of
the Securities Act [15 U.S.C. § 77o(b)] and Section 20(e) of
the Exchange Act [15 U.S.C. §  78t(e)] by
aiding
and abetting Honig's,
Stetson's, Brauser's, and O'Rourke's violations of Section 17(a)(1) and (3) of
the Securities Act [15
U.S.C. §§
77q(a)(1) and (3)]
and
Section
10(b)
of the
E
xchange
Act [15 U.S.C. §
78j(b)] and
Rules
lOb-5(a) and (c)
thereunder
[17
C.F.R. §§
240.1Ob-5(a) and (c)].
14.
Frost violated:
• Sections 5(a) and (c) of the Securities Act [15 U.S.C. §§ 77e(a) and (c)];
•
Section 17(a)(2) of
the Securities
Act [15
U.S.C. §
77q(a)(2)];
• Section
10(b)
of
the Exchange Act [15
U.S.C. §
78j(b)], and Rule lOb-5(b)
thereunder [17 C.F.R. §§ 240.1Ob-5(b)];
• Section 13(d) of the Exchange Act [15 U.S.C. §  78in(d)], and Rule
13d-1(a)
thereunder [17 C.F.R. § 240.13d-1(a)]; and
• Section 15(b) of the Securities Act [15 U.S.C. §  77o(b)] and Section
20(e)
of
the Exchange Act [15 U.S.C. § 78t(e)] by
aiding
and
abetting
Honig's,
S
tetson's, Brauser's, and O'Rourke's violations
of Section 17(a)(1)
and (3) of
the
Securities Act [15 U.S.C. §§
77q(a)(1)
and (3)] and
Section
10(b)
of
the
E
xchange Act [15 U.S.C. §
78j(b)] and
Rules lOb-5(a) and
(c) thereunder
X17
C.F.R. §§
240.10b-5(a) and
(c)].
15. Ladd violated:
• Section 17(a)(2) of the Securities Act [15 U.S.C. §  77q(a)(2)];
D

• Section 10(b) of the Exchange Act
[15 U.S.C. §  78j(b)], and
Rule lOb-5(b)
t
hereunder
[17
C.F.R. § 240.1Ob-5(b)]; and
•
Section
15(b)
of the Securities Act [15 U.S.C. §  77o(b)] and Section 20(e) of
the
Exchange
Act
[15 U.S.C. §  78t(e)] by aiding and abetting Honig's,
Stetson's, Brauser's,
and O'Rourke's violations of Section 17(a)(1) and (3) of
the Securities Act [15 U.S.C. §§
77q(a)(1)
and (3)] and
Section
10(b)
of
the
Exchange Act [15 U.S.C. §  78j(b)] and Rules lOb-5(a) and (c)
thereunder
[17
C.F.R. §§ 240.1Ob-5(a) and (c)] and by
aiding
and
abetting Company
B's
violations of Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)], and
Rules 12b-20
[17
C.F.R. § 240.12b-20] and 13a-1 thereunder [17 C.F.R. §
2
40.13
a-1 ] .
16. Maza violated:
•
Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)];
• Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule lOb-5
thereunder [ 17
C.F.R. § 240.1
Ob-5]; and
• Section 20(e) of the Exchange Act [15 U.S.C. § 78t(e)] by
aiding
and
abetting
Company A's violations of Section 15(d)
of
the Exchange Act [15 U.S.C. §
780], and Rule 15d-1 thereunder [17
C.F.R. §  240.15d-1].
17. Keller violated:
• Section
17(a)(2) of
the Securities Act
[15
U.S.C. §
77q(a)(2)];
•
Section 10(b) of the Exchange Act [15 U.S.C. §  78j(b)], and Rule lOb-5(b)
thereunder [17 C.F.R. § 240.1Ob-5(b)]; and
7

• Section 15(b) of the Securities Act [15 U.S.C. §
77o(b)] and Section 20(e) of
the
Exchange Act [15 U.S.C. §  78t(e)] by aiding and abetting
Honig's,
Stetson's,
Brauser's, and O'Rourke's violations of Section 17(a)(1) and (3) of
the Securities Act [15 U.S.C. §§ 77q(a)(1) and
(3)] and
Section
10(b) of the
Exchange Act [15
U.S.C. § 78j(b)], and Rules lOb-5(a) and (c) thereunder
[17
C.F.R. §§
240.1Ob-5(a) and (c)], and by
aiding
and abetting Company
A's
v
iolations
of Section
15(d) of the Exchange Act [15 U.S.C. §
780], and Rule
15d-1 thereunder
[17
C.F.R. § 240.15d-1].
1
8.
Ford
violated:
• Section
17(a)(2) of the Securities Act [15 U.S.C. § 77q(a)(2)];
• Section
17(b)
of
the Securities Act [15 U.S.C. § 77q(b)]; and
• Section
10(b)
of
the Exchange Act [15 U.S.C. § 78j(b)], and Rule
lOb-5(b)
thereunder
[17
C.F.R. §
240.1Ob-5(b)].
1
9.
Alpha
violated:
•
Sections 5(a) and (c) of the Securities Act [15
U.S.C. §§ 77e(a) and (c)].
20. ATG violated:
~ Sections 17(a)(1) and (3) of the
Securities Act [15 U.S.C. §§ 77q(a)(1) and
~3
)~~
• Sections 9(a)(1)
and
(2) of
the Exchange Act [15.U.S.C. §§ 78i(a)(1)
and
(2)];
• Section
10(b) of the Exchange Act [15
U.S.C. §  78j(b)], and Rules lOb-5(a)
and (c) thereunder
[17
C.F.R. §§
240.1Ob-5(a) and (c)]; and
• Section
13(d) of the Exchange Act [15 U.S.C. §  78m(d)], and
Rule 13d-1(a)
thereunder
[17
C.F.R. §
240.13d-1(a)].

21.
GRQ violated:
~
Section
17(a)
of the Securities Act [15 U.S.C. § 77q(a)J;
• Section 10(b)
of
the
Exchange Act [15 U.S.C. § 78j(b)], and
Rule lOb-5
thereunder [17 C.F.R. §
240.1Ob-5];
and
• Section 13(d) of the Exchange Act [15 U.S.C. §  78m(d)], and Rule 13d-1(a)
thereunder [17 C.F.R. §  240.13d-1(a)].
22.
HSCI
violated:
• Section 17(a) of the Securities Act [15 U.S.C. §  77q(a)];
• Section 10(b) of the Exchange Act [15 U.S.C. §  78j(b)], and Rule
l
Ob-5
thereunder [ 17
C.F.R. §  240.1 Ob-5]; and
• Section 13(d) of the Exchange Act [15 U.S.C. §  78in(d)], and Rule 13d-1(a)
thereunder [17 C.F.R. § 240.13d-1(a)].
2
3.
Grander violated:
• Sections 5(a)
and
(c)
of the Securities Act [15 U.S.C. §§ 77e(a) and (c)];
• Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)];
• Section 10(b)
of
the Exchange Act [15
U.S.C. §  78j(b)],
and Rule lOb-5
t
hereunder
[17
C.F.R. § 240.1Ob-5]; and
•
Section 13(d) of the Exchange Act [15 U.S.C. § 78m(d)], and Rule 13d-1(a)
t
hereunder
[17
C.F.R. §
240.13d-1(a)].
24. Melechdavid violated:
• Sections 5(a) and (c)
of
the Securities
Act [15 U.S.C. §§
77e(a) and
(c)];
• Section 9(a)(1)
of
the Exchange Act
[15.U.S.C. §  78i(a)(1)];

• Section 13(d) of
the Exchange Act [15
U.S.C. §  78m(d)], and
Rule 13d-1(a)
thereunder [17 C.F.R. §
240.13d-1(a)]; and
• Section 15(b) of the
Securities Act [15 U.S.C. §
77o(b)] and Section 20(e) of
the Exchange Act [15
U.S.C. § 78t(e)] by aiding and
abetting Honig's,
Stetson's,
Brauser's, and O'Rourke's violations of
Section 17(a)(1) and
(3) of
the Securities
Act [15 U.S.C. §§ 77q(a)(1) and
(3)] and Section
10(b)
of
the
Exchange
Act [15 U.S.C. § 78j(b)] and
Rules lOb-5(a) and (c) thereunder
[17
C.F.R. §§
240.1Ob-5(a) and (c)].
25.
Opko violated:
• Section 13(d) of the
Exchange Act [15 U.S.C. § 78m(d)],
and Rule 13d-1(a)
t
hereunder
[17 C.F.R. §  240.13d
-1(a)]; and
• Section 15(b) of the
Securities Act [15 U.S.C. § 77o(b)]
and Section 20(e) of
the Exchange Act [15
U.S.C. § 78t(e)] by aiding and abetting
Honig's,
Stetson's,
Brauser's, and O'Rourke's
violations
of
Section 17(a)(1)
and (3)
of
the
Securities Act [15 U.S.C. §§ 77q(a)(1)
and (3)] and Section
10(b)
of
the
E
xchange Act [15 U.S.C. §  78j(b)]
and Rules lOb-5(a) and (c)
thereunder [17
C.F.R. §§
240.1Ob-5(a) and (c)].
26. FGIT
violated:
• Section 17(a)(2) of
the Securities Act [15
U.S.C. §  77q(a)(2)];
• Section
10(b)
of
the Exchange Act [15
U.S.C. §  78j(b)], and Rule
lOb-5(b)
t
hereunder
[17 C.F.R. §
240.1Ob-5(b)];
• Section 13(d) of
the Exchange Act [15 U.S.C. §
78m(d)], and Rule 13d
-1(a)
thereunder [17 C.F.R. §
240.13d-1(a)]; and
1
0

• Section 15(b) of the Securities Act [15 U.S.C. § 77o(b)] and Section
20(e)
of
the Exchange Act [15
U.S.C. §
78t(e)] by
aiding
and
abetting
Honig's,
Stetson's, Brauser's,
and O'Rourke's
violations
of Section
17(a)(1) and (3) of
the Securities Act [15 U.S.C. §§ 77q(a)(1) and (3)] and Section
10(b)
of
the
Exchange
Act
[15 U.S.C. § 78j(b)], and
Rules lOb-5(a)
and
(c) thereunder [17
C.F.R. §§
240.1Ob-5(a)
and (c)].
27.
Southern Biotech violated:
• Sections
17(a)(1)
and (3)
of the
Securities Act [15 U.S.C. §§ 77q(a)(1) and
~3
)~~
• Section
10(b)
of the Exchange Act [15 U.S.C. §
78j(b)], and Rules lOb-5(a)
and (c) thereunder [17 C.F.R. §§ 240.1Ob-5(a) and (c)]; and
•
Section
13(d)
of
the Exchange
Act
[15 U.S.C. § 78m(d)], and Rule 13d-1(a)
thereunder [17 C.F.R. §  240.13d-1(a)].
2
8.
SCI
violated:
• Sections 17(a)(1) and (3) of the Securities Act [15 U.S.C. §§ 77q(a)(1) and
~3
)~~
• Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and
Rules
lOb-5(a)
and (c)
thereunder
[17
C.F.R. §§ 240.1Ob-5(a) and
(c)]; and
•
Section 13(d) of the Exchange Act
[15
U.S.C. §
78m(d)], and Rule 13d-1(a)
t
hereunder
[17
C.F.R. §
240.13d-1(a)].
29. The
Commission
seeks final judgments
permanently
enjoining Defendants
from violating the federal securities laws, requiring each Defendant to disgorge his or its ill-
gotten gains and to pay
prejudgment interest on
those
amounts; requiring
Defendants to pay
civil
11

monetary penalties; barring Defendants from participating in
future penny stock offerings;
b
arring
Defendants Ladd, Maza, and Keller from serving as
officers
or
directors of publicly
traded companies; and seeking any other relief
that
the Court deems
just and appropriate.
30.
Unless Defendants are
permanently
restrained and enjoined, they each will
again
engage
in
the acts, practices, and courses of business set forth in
this Complaint, or in acts
and transactions of similar type and object.
J
URISDICTION
AND VENUE
3
1.
The Commission brings this action pursuant to
the authority conferred by
Sections 20(b) and (d) of the Securities
Act [15 U.S.C. §§
77t(b)
and (d)], and Sections 21(d)
and
(e) of the Exchange Act [15
U.S.C. §§ 78u(d) and (e)].
32.
This Court has jurisdiction over this action pursuant to
Sections 22(a) and (c)
o
f
the Securities Act [15 U.S.C. §§ 77v(a) and 77v(c)], and Section
27
of
the Exchange Act [15
U.S.C. § 78aa]. Defendants, directly or indirectly, singly or in
concert, have made use of the
means or
instrumentalities
of
transportation or communication in, interstate
commerce,
or
of the
m
ails,
in
connection with the transactions, acts, practices, and
courses
of
business alleged herein.
33. Venue lies in this district
pursuant
to
Sections 22(a) and (c) of the Securities
A
ct [15 U.S.C. §§ 77v(a) and (c)], and Section
27
of the
Exchange Act [15 U.S.C. § 78aa].
Certain
of
the transactions, acts, practices and
courses
of
business
constituting
the violations
alleged
herein
occurred within the Southern District of New York. Among other
things, at all
r
elevant times,
Company
B's principal place of business was in Harrison,
New York, within this
D
istrict, and Defendants solicited investments in securities from
investors
in
this District and
sold securities through abroker-dealer located in this District.
12

THE
DEFENDANTS
Individual
Defendants
3
4. Honig, born in 1971,
is a resident of Boca Raton, Florida and currently
works
at an office in Boca Raton with Stetson and O'Rourke, and at
times, Groussman. Honig
owns
GRQ, and
co
-owns, with Stetson, HSCI,
and co-owns,
with
Brauser and Frost, Southern
Biotech.
35.
Stetson, born in
1985, is a resident of Fort Lauderdale,
Florida and currently
works at
an
office
there with Honig
and O'Rourke, and at times, Groussman.
Stetson owns SCI,
and co-owns,
with Honig, HSCI,
of which he is the managing member.
36. O'Rourke, born in 1985, is a resident of Fort
Lauderdale, Florida and
currently works at
an
office in Boca Raton with Honig and Stetson,
and at tunes, Groussman.
O'Rourke owns ATG.
37.
Brauser, born in
1956, is a resident
of
Lighthouse Point,
Florida and
currently
works in an office
in Miami
in the same building as Frost. Brauser
owns Grander.
38. Groussman, born in
1973, is a resident
of Miami
Beach, Florida and
occasionally works at an office in
Boca
Raton
with
Honig,
Stetson and
O'Rourke.
Groussman
owns Melechdavid.
39. Frost,
born in
1936, is a resident of Miami Beach,
Florida. Frost founded
Opko, and is its CEO. Frost is also the trustee for FGIT. Frost enjoys a reputation
as a
successful biotech investor.
40. Maza, born in
1955, is a resident of New York, New York. He
was
the
CEO
of Company A from June 2011 to January 2014.
He is a
CPA
licensed in New York,
as
well
as
an attorney licensed in New York.
41. Keller, born in
1956, is a resident of California.
He was Chief Scientific
Officer of Company A from
about
March 2011
to
January 2014,
and was a member of
its board
13

of directors. He currently
works as President of Sales and Senior
Vice President of Research
and
D
evelopment at
Company
A's successor company.
42. Ladd, born in
1959, is a resident of Raleigh,
North Carolina. At all
relevant
times, he was a resident of New York,
New
York.
He has been the
CEO
of
Company
B
since
F
ebruary 10, 2011.
43. Ford, born in
1956, is a resident of Bolinas,
California.
Entity
Defendants
44. Alpha
is a
Lichtenstein
corporation and hedge
fund, managed by an
unregistered investment adviser
located in New York, New York.
4
5. ATG is a Florida corporation
that O'Rourke owns and
operates
with
its
principal
place
of
business in Florida.
ATG was incorporated in or around 2012.
46. FGIT is
a Florida trust that was formed in or
around
2002.
Frost is FGIT's
T
rustee.
47.
GRQ
is a Florida corporation
that
Honig
owns and
operates
with
its principal
place of business in Florida. GRQ
was incorporated in or
around
2004.
48. Grander
is a Florida corporation that Brauser
owns and operates with its
principal place of
business
in
Florida. Grander was
incorporated
in or
around 2010.
49. HSCI is
a Delaware corporation that Honig
and
Stetson
co-own and of which
Stetson is the managing member, with
its principal place of
business
in
Florida. HSCI was
established in or around 2011.
50. Melechdavid
is a Florida corporation that Groussman
owns and operates with
its principal place of business in
Florida. Melechdavid was
incorporated
in or
around 2006.
5
1. Opko
is a Delaware corporation. Its
principal place
of
business is in
Florida.
14

Frost is Opko's CEO. Opko was
incorporated in or around
2007.
52. Southern Biotech
is a Nevada corporation
that
Honig
operates and
co-owns
with Brauser and Frost with its principal
place of business in Florida.
Southern Biotech
was
incorporated in or
around 2014
53.
SCI
is a Florida corporation
that Stetson owns and
operates with its principal
place of business
in
Florida. SCI
was incorporated in or around 2011.
O
THER RELEVANT
PERSONS
AND
ENTITIES
54. Company
A is a Delaware corporation
headquartered in
Georgia. Company A
w
as controlled by
Honig,
Frost, and Brauser between March
2011 and December
2013. It was
i
ncorporated
in
Nevada in 2006. The company
filed periodic reports, including
Forms 10-K and
1
0-Q with the Commission. Company
A's stock was quoted on
OTC
Link
(formerly known as
the "Pink Sheets"), an
electronic interdealer quotation system
operated by OTC
Markets Group,
I
nc.
In early 2014,
Company A engaged in
a reverse
merger
with a company
associated with
Honig
and his associates. The successor
company is currently
quoted
on
OTC Link. At all
relevant times, Company
A's
stock
was a "penny stock" as
that
teen
is defined in Section
3(a)(51) of
the Exchange Act [15 U.S.C. § 78c(a)(51)], and
Rule 3a51-1 thereunder
[17
C.F.R. §
240.3a51-1].
55. Company B
is a Delaware corporation
headquartered in Harrison, New York.
Its common stock is
registered
with
the Commission pursuant to
Exchange Act Section 12(b)
[15
U.S.C. § 781(b)], and it files periodic
reports, including Forms 10-K
and 10-Q with the
Commission. Company
B's
common
stock was listed on NYSE MKT from
2007 until its
October 19, 2016 delisting. Its stock
is currently quoted on
OTC
Link.
At all relevant
times,
Company
B's
stock
was a "penny stock"
as that
term
is defined
in
Section 3(a)(51) of
the
Exchange Act [15 U.S.C. § 78c(a)(51)]
and Rule 3a51-1 thereunder
[17 C.F.R. § 240.3a51-1].
1
5

56. Company C
is a Delaware corporation
headquartered in San Diego,
C
alifornia, and was
incorporated
in
1988. Company C's common
stock is registered with
the
Commission pursuant to
Exchange Act Section 12(b) [15 U.S.C. §
781(b)], and its common stock
is listed
on NASDAQ.
At all relevant times, Company
C's stock was a "penny stock"
as that
term is defined in Section 3(a)(51) of
the Exchange Act [15 U.S.C. §
78c(a)(51)] and Rule 3a51-
1 thereunder [17 C.F.R. § 240.3a51-1].
FACTS
A. The Company A
Scheme
1.   Honig, Frost
a~zd
Brauser
Obtaiiz Control of
Compa~zy
A
57. In the Company A
scheme,
Honig
and Brauser teamed
up
with
Frost, a
frequent collaborator in Honig
and
Brauser
deals involving biotech
issuers. As alleged below,
the three
men
caused the company to issue shares to
themselves and their associates through
a
series of so-called "private
investments
in
public equities," or "PIPE" fi
nancings, drove the price
o
f the stock higher by secretly paying for
a misleading promotional campaign
and by virtue of
Honig's and
Brauser's
manipulative trading, and then unlawfully
sold their Company A
shares
into the inflated market
for
proceeds of approximately
$9,260,000.
58.
In
November 2010, Honig, along with
his nominees including Stetson
and
G
roussman,
purchased one-third of apublicly-traded shell company.
In December
2010,
B
rauser
and
Frost each
purchased one-half of the remaining
two-thirds
of
the publicly
-traded
s
hell company. Each of Honig,
Stetson, Groussman, Brauser,
and Frost, disguised their
role
in
the
acquisition by purchasing
the shares from an entity used
to make the purchase of the shell
c
ompany. Soon after
they acquired the shell, Honig, Brauser,
and Frost installed a
Frost
associate as the sole disclosed director of
the
company.
59.
In late
2010, Honig, Brauser, and Frost
approached management of
a
private
16

biotech
company ("Company A
Labs"),
including Keller, the Chief Scientific Officer and
Director, and
Company
A Labs
then-CEO ("Company A Labs CEO") with a proposal for taking
t
he
company
public.
Honig, Brauser, and Frost proposed a reverse merger, by which Company
A Labs,
aprivately-held California
company then in
the business
of manufacturing
over-the-
counter
pharmaceutical products, would be merged into Honig's, Brauser's, and Frost's
publicly-
traded
shell.
At the time,
Company A Labs and Keller were working on developing a
formulation
using
a patented technology
called "Qusomes" that Company A Labs hoped to use
in large-scale drug markets, and
the inanageinent of Company A Labs saw the deal as creating
financing possibilities to fund the
company's research.
60. Indeed, Honig,
Brauser, and Frost told Keller and Company A Labs CEO that
the public
company deal would include
raising
$8 to $15
million
dollars to support
research and
development
("R&D") into Qusomes. And they further persuaded
Company A
Labs CEO to go
a
long with the
merger
by
promising hiin
6,650,000
shares of the newly created public company.
6
1. The proposed merger hit a snag,
however, in March 2011.
Pursuant
to
a
$3
million credit line
Company A Labs had with a San Francisco
bank,
the
bank
had authority to
approve all
major transactions, and, in March 2011, it declined to approve the proposed
merger.
The merger nonetheless
closed in June 2011, and the bank thereafter sent a default notice.
On
S
eptember
8,
2011,
Maza,
who had been installed as the CFO and director of
Company A
Labs
by Honig and
Brauser, completed the payoff of the credit line thereby
removing
the
obstacle to
the
merger,
but
saddling Company A Labs with
short-term, high
-interest rate notes
that included
a
conversion option into equity of the company.
6
2. In connection with the reverse merger,
Honig, Brauser,
and Frost
arranged the
s
ale of certain unprofitable
Frost assets
to the
public company in exchange for 8,345,310 shares
1
7

and the obligation of the company to
file a
registration
statement for these shares, providing
further value to Frost.
63. After the closing of the
reverse
merger of Company
A Labs into the shell
company in June 2011, the surviving
public company became Company A. Honig, Brauser,
Frost, Groussman, and Stetson controlled the vast majority of the Company
A's
stock
and were
affiliates of Company A.
64. After the merger, Company A
listed
its
corporate address at 4400 Biscayne
Boulevard in Miami, the same business
address
then shared by Honig,
Brauser and Frost.
65. In addition to controlling
the vast majority
of Company
A's outstanding
shares,
Honig, Brauser, and Frost
exercised
control over
the management of Company A. Before the
d
eal
closed,
Honig
and
Brauser, acting
with the knowledge and consent of Frost, Stetson
and
Groussman, had installed their associate, Maza, as the CFO and a director of Company A
Labs.
After the merger, Maza became the
CEO
of Company A. Thereafter,
Maza sought approval
from Honig
and.
Brauser for every
business decision. For example, at the direction of Honig
and
Brauser, Maza agreed to divert funds from Company A to pay rent for the office of an
unrelated
entity co-owned. by Honig and Brauser.
66. In their capacity as the three board members of Company A,
Keller, Maza, and
the Frost associate concealed Honig's and Brauser's control of Company A
by signing off on
public filings that failed to disclose the involvement of Honig, Brauser, Stetson
and Groussman,
omissions that made those filings materially misleading. These filings included Company
A's
F
orm 10-K
filed
on April
16, 2012.
67. At the time they signed these filings, Keller and Maza
understood that
Honig
a
nd Brauser, with Frost's knowledge and consent,
controlled
Company
A's management, and not

Maza.
As Keller
explained
in a February 12,
2012 email
to a
Company
A
colleague, "[t]he real
p
ower
is
with Barry
Honig and
Mike
Brauser.
Elliot
[Maza] is just a mouth
piece." Following
t
he merger, Company
A's
filings nonetheless identified only
Frost, but not Honig or
Brauser, as
a
control
person.
68. Honig,
Brauser, and
Frost failed to keep their
promises to invest
money
in
Company A for R&D.
Instead, in
a series
of
PIPE financings, which
included
warrants
for
additional
shares, done between February 24
and March 12, 2012,
they limited their
investment
t
o keep the
business operating
at a
minimal
level and to fund
Maza's and
Keller's generous
c
ompensation,
forcing Company A
to abandon its R&D
efforts entirely bymid-2012.
Kelley's
c
ompensation
snore than
doubled once he began working with
Honig and
Honig's associates,
whereas Maza's annual
compensation ranged from
$300,000 to $600,000.
6
9.
Honig,
Brauser, and
Frost also used the
financings to amass more, ever-
cheaper
Company A shares,
and although the financings
did
nothing
to enhance
Company A's
continued growth,
Maza and Keller went along with them
because both
were promised, and
ultimately awarded,
substantial salaries as well
as millions of Company A
shares, by Company
A's real control
persons, which
included
Honig,
Brauser, Frost, Stetson
and Groussman.
7
0.
By
April 1, 2013,
and pursuant to an agreement to
acquire, hold or sell their
shares in
concert,
Honig,
Frost, Brauser,
Maza,
Keller,
and the
Frost associate had amassed
44,818,312 shares, or
almost
71 %
of the Company A
shares outstanding, with
Honig alone
holding 5,542,654
shares,
or
8.8% of the
company's
outstanding
shares.
Yet, even though
Company A filed an
amendment to its Form 10-K annual
report for the 2012
fiscal year on
September 13,
2013, signed by Maza, Keller,
and the third board member, for
the specific
purpose of updating
the beneficial
ownership table, the annual
report failed to disclose
the
19

existence of the Honig
-allied group, which beneficially owned nearly
three-quarters
of Company
A's outstanding
shares.
71. On July 16, 2012,
Company A Labs CEO —who had been ousted from
C
ompany
A by Honig and Brauser with
Keller's
assistance
—sued
Company
A, Honig, Brauser,
Maza, and Frost. Brauser, who was
not
an
officer
or director
of Company A, took the lead in
negotiating
a
settlement on behalf of Company
A,
frequently
updating Honig and Frost on
his
negotiations. In September
2013,
Brauser
and Honig came to terms with Company A Labs
CEO,
agreeing to pay hiin $2 million in return for
his
relinquishing
his claim to the Company A
shares
he had been
promised
in
the
merger,
and that he had never received. Maza then
ratified
the
settlement
terms~on September
5, 2013.
2. The Company A Pump and Dump
72. In preparation for
the
Company A pump
and
dump,
during August and
S
eptember,
2013,
Stetson,
at Honig's direction, deposited in a brokerage
account almost
4
million
Company A shares that had been issued to Honig. Stetson
worked
closely with
Honig,
Brauser, and Frost and knew how much Company A stock
they controlled, and that Honig and
Brauser were directing Company A's
inanageinent and policies.
In
connection with the deposit
of these shares, Stetson
submitted Honig's signed answers to the broker's questionnaire, falsely
denying any relationship between Honig and Company A or
its affiliates. At the time that
Stetson made that submission, and Honig signed it, each
knew,
or
was reckless in not knowing,
that
Honig
was an affiliate of Company A because Company A
was
under
Honig's control.
73. On September 4, 2013, Stetson
facilitated the issuance
of
false attorney opinion
letters to Company A's transfer agent in order to
remove restrictive legends
from
Honig's share
c
ertificates. These opinion
letters contained the material misrepresentation that Honig was not
20

an
affiliate of Company A,
a representation
that Stetson knew, or was
reckless in not knowing,
was false, given
what he knew about
Honig's control over Company
A's
management and
polices.
74.
As part of the
process
for
depositing
Honig's shares with a broker,
and in
preparation. for
the pump
and
dump,
CEO
Maza was also required to issue
a
letter
to confirm the
authenticity of the stock
certificates. In a letter
to the broker-dealer,
dated September 10,
2013,
Maza wrote "[w]e further
acknowledge and
agree that there is no other
agreement or
understanding between Barry
Honig and [Company
A] that would
preclude Barry Honig from
selling or otherwise
disposing of shares
represented above." Maza knew, or
was
reckless
in
not
knowing, that
this statement was
false because Honig was an
affiliate
of
Company A,
and that, as
an
affiliate, Honig's ability to sell
his Company A shares
would be subject, under
the federal
securities laws, to volume
limitations.
75. Once
the restrictions were
lifted from Honig's
shares and. the shares
were
d
eposited into a brokerage account, Honig
was ready to sell them. In
September
2013, Honig
directed his associate,
O'Rourke, to reach out to Ford,
a seasoned stock promoter
who used his
p
latform on the Seeking
Alpha website to share
his
purportedly
independent investment
analysis
o
f
selected companies.
O'Rourke contacted
Ford and proposed that
Ford write
an
article on
the
Seeking Alpha website promoting
Company A in
exchange
for
below
-market price Company A
s
hares. At that time, Honig,
Frost, Brauser, Stetson, Groussman,
O'Rourke, Keller,
Maza, and
the
Frost associate board member
owned about 71 % of the
outstanding Company A
shares, and
the
market for Company A was virtually
nonexistent (with
zero volume on September
20, 2013).
O'Rourke instructed Ford to
write a favorable article
about Company A emphasizing
Frost's
i
nvolvement (because
Frost was known as
a billionaire and successful biotech
investor) and
the
2
1

supposed
rosy prospects
of
Company A's R&D.
76.
On
September 23, 2013, Honig and
some associates began trading Company A
shares to
create
the
appearance of market activity and interest in
Company A in advance of the
p
lanned Ford article. That day, the trading
volume
of
Company A shares soared to
302,000 from
zero volume the previous
day.
7
7.
The September
23rd trading also gave Honig
a way to surreptitiously pay Ford
for his upcoming
favorable article on Company A. O'Rourke
called Ford and told him to put in
buy orders for Company A stock
at $0.40 in order to ensure his order
was executed against the
corresponding sell order
placed by Honig. Honig then sold
180,000 Company A shares to
Ford
at
$0.40 in
a coordinated trade, a price well below
the
price at which
these shares
otherwise traded
d
uring
that day.
78.
O'Rourke joined the
trading
at the end of the trading
day
on
September 23rd to
"mark the
close," i.e., to ensure that the last price of the
day would be higher, giving the
false
i
mpression that Company A's share price
was
on an
upward trajectory. Specifically,
at 3:58
pm
that day, O'Rourke, through his
entity ATG, placed a bid to buy Company A
shares at $0.68, a
significantly higher price than
the
prior
buy order at $0.55, which had been
entered at about 3:06
pm. Another Honig
associate, who had purchased shares from Honig earlier in
the day, placed a
corresponding sell order to
complete
the
transaction at the inflated price.
79. In further preparation for the
publication of the Ford article touting
Company
A,
and to enhance the false picture of an
active market for the stock, near the
end
of
the trading
day
on
September 26th, Honig and his
associates engaged in a series of
coordinated trades.
For
example, the Barry &Renee Honig
Charitable Foundation, controlled by Honig,
sold Company
A shares to a Honig
associate at $0.68, and two minutes later
Groussman's entity Melechdavid
22

executed a transaction against ATG,
O'Rourke's entity, at $0.68.
80. Less than half an hour
before market close
on
September 26, 2013, as directed
by O'Rourke and Honig, and after review by Keller, Ford
published
a
materially misleading
promotional
article
on
Seeking Alpha, titled "Opko and Its Billionaire CEO
Invested
in Company
A." Ford presented a bullish outlook for Company A and concluded
that
"Company
A should be
trading for more than twice today's valuation." In the article, which
included a question and
answer interview of Keller, Ford quoted Keller touting the benefits of Company
A's Qusomes
technology. Keller misleadingly stated that Company A had
a
formulation
ready for testing to be
brought to the billion-dollar injectable drug market.
Yet, as
Keller
knew, as of summer 2012, all
R&D efforts had been shut down without
the
successful formulation of
an injectable drug and
C
ompany A had ceased all
efforts to develop this technology in mid-2012.
8
1.
Ford's article failed to disclose that he had been
compensated by
Honig
for
writing the article, through Honig's sale to hiin
ofbelow-market
Company
A shares on
S
eptember
23, a
material omission.
Instead, Ford included a disclaimer that merely
disclosed
"I
a
m long [Company A]. I
wrote this article myself, and it expresses my own
opinions.
I am
not
r
eceivin~pensation for
it
(other
than from Seeking Alpha. I have no
business relationship
with any
company
whose
stock
is mentioned in this article."
(Emphasis added.)
8
2.
The market reacted strongly to the Company A promotion:
the
trading
volume
o
f Company
A
stock
rose
from
approximately 1,100 shares on September 25,
2013 to
over
4.5
million
shares
on September
27, 2013 and to more
than
6 million shares on October 2,
2013.
T
he
share
price
increased from an
average of about $0.48 during August 2013 to an intraday
p
rice
of
$0.97
on October
17, 2013.
83.
Between
the start of the promotion following the
publication
of
Ford's article
2
3

on September 26, 2013 and December 31, 2013,
Honig and
his associates sold shares into the
inflated market
for
proceeds of
approximately
$9,260,000:
C
om
any A
Pump
and
Dum
Proceeds
DefendantsTrade Dates
(
2013)
Net Quantity
Sold
Proceeds
Honi
9/23 — 12/16(5,892,689)
$3,416,455.17
Brauser and Grander9/27 — 12/23(2,128,316)$1,137,775.46
Frost
10/1 — 10/4(1,987,991)$1,085,321.74
G
roussman
and
1Vlelechdavid
9/26 —
10/14
(1,229,166)$677,272.37
S
tetson
and
SCI
9/27 —
12
/
1
8
(500,000)
$279,859.68
O'Rourke and ATG9/23 — 12/27
(250,000)
$148,443.68
Al ha Capital
10/3 — 11/27(3,772,200)$2,513,724.08
Total
(15,760,362)
$9,258,852.1.8
8
4. No registration statement was then in effect for any of Honig's,
Brauser's,
Frost's or Groussman's sales in the September
through
December 2013 period. No exemption
from registration was available to any of them, or their entities. Moreover, since Company A did
not trade on a
national
securities exchange, as affiliates
of Company A,
these Defendants could
only lawfully
sell 1%
of the company's total shares outstanding in
any
three-month period. As
o
f September 2013, Company A had approximately 63 million shares outstanding, and as of
N
ovember 15, 2013, it had approximately 75 million shares outstanding. Because Honig,
B
rauser, Frost, and Groussman, and their respective entities, were under common control with
C
ompany A, each was an affiliate of Company A, and each sold shares in excess of the
a
pplicable volume limitations.
3.    Alpha's Company A Sales
85. Alpha
frequently
co
-invested with Honig,
and participated
in several
rounds
of
the
Company A PIPE
financings, resulting
in Company
A's issuance
of
millions
of
shares to
Alpha at steeply discounted prices in
January
2012, Apri12013 and September 2013.
86.
On September 5,
2013,
when Honig
and
Brauser reached their
settlement
with
24

Company A's CEO, by
which he disavowed his
ownership of the
6,650,000 shares to
which
he
had been entitled, Alpha
purchased 1.5 million of those shares at $0.15
per
share, with the
i
ntention of selling the shares into the inflated market
created by the Honig
-orchestrated
promotion. Company A issued the
shares to Alpha on September 23, 2013, days before the Ford
article
appeared on Seeking Alpha.
On October
29, 2013,
Alpha obtained an attorney opinion
letter that it
supplied to Company A's
transfer
agent so that the
transfer
agent would remove
the
restrictive legend
from the share certificate. The attorney
opinion letter —
as Alpha knew
or
was
reckless
in not knowing —falsely represented that Alpha had held
the
shares
for
at least 6 months
and that the shares could
be sold in accordance with the Securities Act Rule
144
safe
harbor,
as
exempt
from
the
registration provisions.
87.
Between October 3, 2013 and November 18, 2013, Alpha, in lockstep with
Honig, Brauser, Frost,
Groussman,
O'Rourke, and
Stetson (and their respective entities), sold
3.7
million
Company A shares for proceeds of
$2,513,724, including virtually all of
the shares Alpha
had obtained in
September 2013.
B. The
Company B
Scheme
1.   Honig and Associates SecNetly Obtain Cof~zpany B Shares
88.
During 2015 and 2016, Honig and his associates used Company
B,
a publicly
traded shell, as
another vehicle for apump-and-dump scheme.
Honig
and his partners used
many of the same
tactics they had employed in the
Company A
scheme: they bought cheap
shares,
intending to exercise control over the management and polices
of
the
company;
exercised
that
control; orchestrated a misleading
promotion of
the
company
that drove up the
stock
price
and the
trading volume of the company's shares; and dumped
their
shares
for
a profit
in
the
inflated market. Despite
their control over various actions taken by Company B, and their
agreement to buy,
hold and/or sell their shares in concert,
Honig
and his associates —this time
25

including
Groussman,
Brauser, Stetson and O'Rourke
—took
numerous steps to conceal their
involvement, and to perpetuate the false appearance that the company was actually being
controlled by its CEO.
89.
In 2015, Honig and his associates began planning the pump
-and
-dump
of
C
ompany
B's shares.
Honig set
the scheme
in motion on September
26, 2015 when he informed
Stetson that "[w]e need
to
put
together
a
term
sheet
for Company B,"
and outlined proposed
terms of the arrangement.
Honig
directed
Stetson
to send the proposal to Ladd, Company
B's
CEO.  The deal contemplated the issuance
of
2.8
million Company
B shares, along with warrants
to acquire an
additional
5.6
million
shares, subject to a 4.99% conversion blocker. This deal
s
tructure allowed the investors repeatedly to convert and
sell
their shares while appearing
individually to stay below the 5%threshold ownership at which Exchange Act Section
13(d)
required public
disclosure of
holdings.
By ostensibly staying
below the
5%ownership
threshold,
and evading the public
reporting
requirements,
Honig
and his associates increased the
likelihood
that
they could disguise their scheme to pump up the price of Company B's
shares
in anticipation
of a profitable
sell-off to unsuspecting investors.
90. Ladd
was fully aware of Honig
and his associates' combined interest in, and
c
ontrol over,
the
company, but failed to disclose
it
in Company
B's public filings. On October 1,
2015, Ladd
einailed Honig that "NYSE MKT wants
to know the buyers. $175,000 x 4 investors
w
ill
be
each at 4.9%.. .." Honig replied that same day, copying Brauser
and
Stetson,
that he
would
"get back to you with names shortly for now use Barry Honig Mike Brauser
OBAN
[an
L
LC
created by Stetson]." On October 5, 2015, Stetson provided Company B with
the investors
who
would participate in the financing, which included GRQ (Honig),
Melechdavid
(
Groussman), Grander (Brauser),
ATG (O'Rourke) and
SCI (Stetson).
2
6

91. The
Honig
-led
financing ultimately provided $700,000 to Company B (the
"
October 2015
Company B Financing"). On October 8, 2015,
Company
B filed a Fonn 8-K
disclosing that the
company had "entered into separate
subscription
agreements . . .with
a
ccredited investors . . .relating to the issuance and
sale of $700,000 of units
. . ."
In keeping
with Honig's
desire to conceal the large ownership stake
of
his
team,
Ladd did not disclose
the
investors' names
in
the
Form 8-K.
2.
The
Compaizy B Punzp and Dump in
February
2016
9
2. Having coordinated the accumulation
of stock with
Groussman, Brauser,
Stetson and O'Rourke,
Honig, with his partners' knowledge and consent, then secretly paid
for
a
promotion that included
materially misleading information and was supported by his own
manipulative trading activity.
93.
On or around January
21,
2016, by
which tune Honig, Groussman, Brauser,
Stetson and
O'Rourke
had
acquired
at
least 16.3% of Company B's outstanding stock, Honig
directed Ladd to wire $125,000 to a
well-known stock promoter as an up-front payment for the
promotion of Company B. Shortly
after
the payment
for
the
stock promotion, on February 3,
2016,
an article was published online touting
Company
B's positive prospects
in social
and
real
money
gaming sites and intellectual property
relating
to slot machines. The article did not
disclose that
the author had been paid by
Company B —
at Honig's
direction —
to write the article.
A
ft
er
the
article was published on February 3, 2016,
there was
a 7000%
increase from the
p
revious
day's trading volume, and an intraday
price increase of over
60%.
Honig, Ladd,
S
tetson, and O'Rourke sold
over
430,000
shares into this inflated market for proceeds of
a
pproximately $198,800.
27

Com  an  B
Pum
and
Dum Proceeds, Following Februar 2016 Promotion
DefendantsTrade
Dates (2016)Net Quantity SoldProceeds
Honig and
GRQ
2/3 — 4/6
(231,050)$123,154.87
Stetson
2/3 —
2/11(40,000)$20,483.33
O
'Rourke and ATG2/3 — 2/9
(64,366)$15,960.72
Ladd
2/3 — 5/3
(96,072)
$39,204.12
Total
(431,488)
$198,803.04
3. The Company
B
Pump
and
Duf~tp in May 2016
9
4. Honig soon identified a
potential acquisition
target
for Company B
that would
give
Honig
and
his associates another way to profit
from their
interest
in Company B.
The
proposed
deal involved awell-known cybersecurity
innovator
who had created a popular
antivirus
software bearing his name ("the Cybersecurity
Innovator").
O'Rourke
took
the lead at
Honig's direction (and with the knowledge and consent
of Groussman, Brauser and Stetson) in
a
rranging
a
deal between Company B and the
Cybersecurity Innovator. On
March 29, 2016,
O'Rourke sent the Cybersecurity
Innovator a term sheet
for
the asset purchase of Cybersecurity
Innovator's company, "CI
Company,"
by
an "NYSE listed company." The CI Company
indicated
interest on Apri13, 2016. O'Rourke wrote to
Honig on
Apri13, 2016 and asked
Honig
if he would
"still
want to
pursue [Cybersecurity Innovator] deal." After Honig replied to
O'Rourke that same day "Yea!",
O'Rourke introduced Ladd to the Cybersecurity Innovator on
Apri14, 2016, to
begin negotiating a transaction between
Company
B and the Cybersecurity
Innovator's various business
interests.
95.
Subsequent correspondence between Ladd and O'Rourke and between
O'Rourke and
Honig, reflect the ongoing and significant role
Honig
and O'Rourke played in
o
rchestrating the deal.  Company B and the Cybersecurity
Innovator
agreed to terms on May 8,
2016.
96. On May 9, 2016, at 8:30
a.m., Company B issued a press
release
announcing

its
merger with CI Company.
In
the
release, Ladd misleadingly described the
Cybersecurity
I
nnovator's prior financial success. He
falsely claimed that the Cybersecurity Innovator had
"sold his
anti-virus company to
Intel for $7.6 billion," suggesting that Company B might achieve
s
imilar success. Yet, as
Ladd knew or was reckless
in
not
knowing,
the sale of the Cybersecurity
I
nnovator's namesake
company
to
Intel at that price had occurred over a decade after the
C
ybersecurity Innovator's departure
from that company.
97.
Knowing that
Ladd's misleading announcement of the deal would be released
l
ater that morning, on May 9, 2016,
Honig traded in Company B stock to create the misleading
a
ppearance of market liquidity.
In
pre
-market trading that morning, Honig
bought and
sold small
quantities
of Company B stock dozens
of
tunes.
Joining
the effort
to
paint a false picture
of
legitimate market interest
in the stock,
Brauser,
as
well
as
Groussinan,
and his entity,
Melechdavid, engaged
in coordinated trades in Company B stock with Honig in pre-market
t
rading that morning.
98.
That same day,
StockBeast.com,
a
well-known
Internet
stock
promotion
w
ebsite, published
an
article
by an unnamed author entitled "[Company B] Beastmode engaged —
[
Cybersecurity
Innovator] driving
the
Bus." The StockBeast.com article touted Company B and
highlighted the Cybersecurity
Innovator's involvement, repeating Ladd's materially false claim
that
the Cybersecurity
Innovator
had
"sold his startup company to Intel for $7.6BB," and
proclaiming: "This is
big big big!"
99.
This promotion and Honig's, Brauser's and Groussman's manipulative trading
on May 9 were
effective in driving up both volume and price: on May 6, 2016 (the last day of
t
rading prior to the
promotion), Company B had
trading
volume of 71,005 shares and a closing
pri
ce
of $0.36. On May 9, 2016, the
stock closed at $0.49 (representing an increase of 34
2
9

percent
over the
prior day's close) with trading volume
of
snore
than 10 million
shares.
The
t
rading volume
for Company B stock peaked at
109,384,614 on
May 17, 2016
with
a
closing
price of $4.15.
100. In the days
immediately following the announcement of the CI Company
a
cquisition, Honig, Brauser, Stetson,
Groussman
and
O'Rourke, pursuant to their agreement to
buy, hold
and/or sell their shares in concert, sold
over
9.3
million Company B shares, resulting in
total proceeds
of over $9.4 million:
Com
any B Pump and Dump Proceeds,
Following
Ma  2016
Promotion
Defendants
Trade Dates
(
2016)
Net Quantity SoldProceeds
Honig and GRQ5/9 —
5/20(3,783,001)
$2,393,915.52
B
rauser
and
Grander5/9 — 5/18(2,137,668)
$3,839,295.64
G
roussman and
Melechdavid
5/9 —
5/11(1,415,870)$999,873.56
S
tetson and
SCI
5/9 —
5/12(750,000)$660,798.20
O'Rourke and
ATG5/9 — 5/16(750,000)$990,661.97
Ladd
5/9 —
5/31(471,000)$516,554.08
T
otal(9,307,539)
$9,401,098.97
4.    False
Statements by
Ho~Zig,
Frost, Brauser, Stetson, Groussf~za~z,
O
'Rourke, and Ladd in Beneficial Ownership and Company
B
Filings
101. Although they were
acting in
concert,
and pursuant to an agreement to do so,
H
onig,
Frost,
Brauser, Stetson, Groussman and O'Rourke
knowingly or recklessly concealed
t
heir concerted efforts from the
investing
public. Ladd,
with full knowledge of both the Honig
g
roup's
ownership and their
direction of
the
management and policies of Company B, also kept
t
heir control a secret, signing
Company B public fi
lings
that did not disclose the full extent
of
t
heir ownership or control.
After
the
October 2015 Company B Financing closed, Honig,
G
roussinan, Brauser, Stetson and
O'Rourke as
a group
collectively owned at least 2.6 million
shares,
or over 16% of the shares
outstanding after
the
issuance,
and
their obligation to file a
S
chedule 13D under Exchange Act
Section 13(d) arose as of October 8, 2015. Moreover, they
30

each had warrants to
obtain a
total of an additiona14.6
million
Company B shares,
which, if
they
w
ere all converted,
would have resulted
in Honig, Groussman, Brauser, Stetson and O'Rourke
c
ontrolling
at least
42% of the
total coininon shares
outstanding
at that tune.
102.
Honig, Groussman, Brauser,
Stetson
and
O'Rourke exercised control over
Ladd and the
management and
policies of Company B.
For
example,
on October 1, 2015, Ladd
a
sked
for
and
received Honig's
direction with respect to how to disclose Honig's group's
stock
a
cquisitions to
the NYSE MKT exchange.
O'Rourke, at Honig's
direction,
negotiated
on
C
ompany B's
behalf the terms on
which
the
Cybersecurity
Innovator
would
sell
CI
Company
to
C
ompany
B.
Indeed,
in emails after the
CI Company acquisition, Honig freely accepted credit
for his role in the
transaction. On May
12,
2016,
for example, Honig received an email
from
an
i
nvestment firm
congratulating him on the recent
transaction: "You're invovlved [sic] with
[
Company B]? Impressive!"
Honig responded that he was the "[l]argest
shareholder, fund and
relationship
with [the Cybersecurity
Innovator]." In early August 2016, Honig also admitted his
u
ndisclosed role at
Company B in a chat
conversation with Stetson: "its great in [Company B]
because we
are behind the scenes."
1
03.
Because they acted
in
concert
for the purpose of
acquiring, holding
and
disposing
of Company B shares,
each of Honig, Groussman, Brauser,
Stetson
and O'Rourke was
a
member of
a
group and considered a
single "person"
under
Exchange Act
Section
13(d)(3). As
g
roup
members, each
individual
was
required to
satisfy
the group's
reporting obligation by
m
aking
a
Schedule
13D filing disclosing that each was a
member of
the
group and disclosing the
n
umber of shares
each of them beneficially owned.
However,
none
of Honig, Groussman,
B
rauser, Stetson or O'Rourke
ever made a Schedule
13D filing disclosing their respective
ownership
or membership
in
a group, acting
intentionally to conceal from the market
the
size
of
3
1

their group's position and their coordination and thereby to deceive investors.
104. Instead, on October 19, 2015, Honig filed a Schedule 13G, claiming
only his
o
wn
6.59%
beneficial
ownership and
falsely stating
that the securities "are not held for
the
purpose
of
or
with the
effect
of changing or influencing the control of
the
issuer" —
a
representation he knew,
or
was reckless
in
not
knowing,
to be false. Indeed, because Honig and
h
is
associates exercised control over Company B's management and policies — as Honig
c
andidly acknowledged in emails — he was disqualified from making a 13G filing. In February
2016, Honig filed an amended Schedule 13G
disclosing
an ownership percentage of
9.1%.
Brauser filed a Schedule 13G on May 4, 2016, in which he claimed 7.4 %beneficial ownership
via his
entity Grander. In each of these filings, Honig and Brauser also falsely
claimed that they
were passive
investors without any intention
to
influence or
change
control of
the company and
omitted the fact that each was a
member of
a group.
105. Similarly, in Company B's 2015 Form 10-K filed on April 11,
2016,
only
H
onig
was disclosed as a
beneficial owner, holding
8.6%.
Notwithstanding
that Ladd knew that
Honig, Groussman,
Brauser, Stetson
and O'Rourke were
working
together, he signed the 2015
Form 10-K failing to disclose
their
group beneficial
ownership.
Ladd also signed a materially
misleading S-1/A
registration
statement filed
on January
13, 2016 for the 8,400,000 Company B
shares issued in the
October
2015
Company B Financing, failing
to disclose the group beneficial
ownership of
GRQ, Grander,
Melechdavid, ATG and
SCI.
C. The
Company C
Scheme
I.   Honig and Stetson Obtain Coiatrol of Company C
106. In early 2014, Honig identified apublicly-traded shell company
that was
unencumbered by
debt or pre-existing convertible
debt,
and sought an
appropriate private
c
ompany for purposes of a reverse merger and pump-and-dump scheme.
32

107. At
or
about
the same tune,
the
CEO of Company C ("Company
C's CEO") was
introduced to "Entity
H,"
a
frequent co-investor alongside Honig and Brauser.
At the time,
C
ompany
C, a
private company developing cancer therapies and
diagnostic products, was
looking for funding for its
research
and development efforts, and Entity H suggested to Company
C's
CEO
that
he turn Company C into a public company. On
July
8, 2014, Company C executed
a reverse
merger of Company C into the shell company Honig had identified. Company C's
CEO understood that
the two lead investors in the transaction were Entity H and HSCI, both of
w
hich
had signed the
deal documents. Stetson had described HSCI to Company C's CEO as his
o
wn
investment vehicle.
In fact, while Stetson
was
the sole managing ineinber of HSCI, Honig
actually owned at least
94% of HSCI, a fact
that
Stetson
did
not disclose
to
Company
C's CEO
or the market.
1
08.
In an initial $3 million capital raise in February 2014, in connection with the
contemplated
merger, HSCI invested $1 million
and Entity
H invested
$1.7
million in return for
a
substantial position in the shell. As a result, the stake
of
Entity
H
and HSCI (including
c
onversion of all warrants) amounted to about 67% of the authorized shares of the newly public
C
ompany
C.
The terms of the merger included granting a "Consent Right" to Entity H and its
affiliates, by
which Entity H could block or approve many kinds of Company C transactions,
including issuing additional shares, any change of control and other basic corporate actions.
1
09.
In March and Apri12015, Honig orchestrated two private placement financings
for Company C: Series D and Series E. Honig determined the amount, source and structure of,
a
nd
participants in, these financings. For example,
when
deciding whether a potential investor
c
ould
take
part in the March 2015 financing round, Company C's CEO explicitly deferred to
H
onig, writing in an email to Honig on March 19, 2015, "[h]e might be another party you might
33

want to
allow
to
invest along with
the current group. Viewed this as your
choice not mine. That
is why I asked
him
to
call
you."
1
10.
The
Series
D financing
closed
in
late March 2015 and included
a buyout of
Entity H's notes, including the Consent Right, at a favorable
purchase price. The
investors who
p
urchased the notes
included various entities owned and controlled by Honig, Stetson,
O'Rourke,
Brauser, Frost,
and
Groussman: HSCI,
Southern Biotech, GR.Q, ATG,
Grander, and
Melechdavid.
111. The
Series
E
financing,
which
closed Apri16, 2015, included
warrants, and
raised
$12 million for Company
C
on
terms highly favorable to Honig and
his
chosen
investors,
including
Southern Biotech,
and Frost's FGIT and Opko.
2. The Company C Pump aizd Duf~ip iiz
April
201
S
112. One of
the goals
of
the private placement financings, as Honig, Stetson,
O'Rourke,
Brauser,
Frost, and Groussman knew, was to generate
market interest
in
Company C
stock in preparation for a planned stock promotion. On April
3, 2015, O'Rourke, acting at
H
onig's
direction,
drafted a
press
release
(with
input
from
Company C's CEO, Honig
and
Brauser) announcing the $12 million
private placement
in
which Frost's entities
had participated.
Honig then
directed O'Rourke to write a promotional article, which O'Rourke
published
under
the
pseudonym "Wall
Street Advisors"
on
Seeking Alpha
on
April 8, 2015 at
11:13
a.in.
The
a
rticle, titled "Opko Spots Another
Overlooked Opportunity
in
Company C Therapeutics,"
highlighted Opko's and Frost's investment in Company
L. Despite his involvement in
facilitating the Company C financing and
his extensive business relationships with Honig,
S
tetson, Brauser, and Frost, in his article,
O'Rourke
knowingly
and falsely claimed that
"[t]he
a
uthor
has no business
relationship with
[Company C]." He also knowingly
and
falsely
claimed
34

that he was
"not
receiving compensation for
[writing
the
article]."
113.
Anticipating the release of O'Rourke's
Seeking
Alpha
article, ATG,
Melechdavid, and O'Rourke
engaged in early
trading of Company C shares on April 8, 2015
with the
intention of creating a false
appearance of market interest
in
the stock. That
trading
included at least one
matched trade, with
Melechdavid submitting the buy order and ATG
s
ubmitting the sell
order for the same price at 9:38
a.in.  The share price of Company C opened
that day at
$3.14 and reached
$3.73 in the minutes
before the promotion was released.
114. The
promotion was successful. The
trading volume of Company C shares rose
almost 7500%
from 8,833 shares
on Apri12, 2015 to
667,454 shares on Apri16, 2015,
following
the
announcement of the Series
E private placement. The
volume
increased to 858,709
on April
9,
2015, the day
after O'Rourke's article
was published.
Company
C's share price went
from a
c
losing price of
$1.91 on April 1, 2015 to a
closing price of $4.30 on Apri19, 2015. The
Defendants
listed below,
acting pursuant to their agreement to
buy, hold or sell their Company C
shares
in concert,
sold shares into the
market from April 6 to June 30, 2015
for total proceeds of
a
ver
$5.5
million, as
detailed below:
Company C
Pum and Dump Proceeds,
Following Apri12015 Promotion
Defendants
Trade
Dates (2015)Net Quantity
SoldProceeds
Brauser
4/13 —
6/30(576,400)
$1,600,826.76
G
roussman and
Melechdavid4/6 — 6/23
(99,616)$342,984.59
Stetson and
HSCI4/6 —
6/30(1,080,379)
$3,607,248.91
O'Rourke
and ATG4/8 —
6/30
(30,064)$69,744.51
Total
(1,786,459)$5,620,804.77
3.
The Company C PunZp
and Dump in June/July 2015
115.
In June 2015, when the
market for Company C shares had cooled,
O'Rourke
r
ecruited
Ford to
publish another Company C
tout on Ford's blog.  On
July 1,
2015, Ford
published
an article titled
"[Company C]: Near
-Term
Catalysts Could
Push Shares from $2 to
35

over $5."
The article contained
materially false
statements, including that a
licensing deal was
imminent,
when it was
not,
and
that there were
near-teen therapy development events that
could
take the
share price
to $5, when. in fact
clinical trials were in early stages.
Although, as before,
Honig
compensated Ford
for writing the blog post, Ford did
not disclose that he had been paid.
116.
Ford's article had the
desired impact
on
the market:
Company C trading
volume
increased
from 227,182 shares on June
30, 2015 to 798,213 shares
on July 2, 2015.
Likewise
Company C's share price went
from
a
closing price of
$2.32 on
June
30, 2015 to $2.71
on
July 2, 2015. Pursuant
to their agreement to
buy, hold or dispose of
their shares in concert,
the
Defendants listed
below sold shares into the
market from July 1 to
December 31, 2015 for
proceeds
of over $2.7
million, as detailed below.
C
om  any C
Pum
and
Dum Proceeds,
Following June 2015
Promotion
D
efendants
Trade Dates
(2015)Net Quantity Sold
Proceeds
B
rauser
7/1 — 10/7
(363,050)
$749,025.45
G
roussman and
Melechdavid7/15 — 12/18
(212,034)
$243,250.96
S
tetson and
HSCI
7/1 —
12/7
(682,539)
$1,525,588.49
O
'Rourke and
ATG
7/1 — 12/31(179,690)
$235,253.20
Total
(1,437,313)$2,753,118.10
117.
Honig and
Stetson continued to invest
in Company
C
and directed
critical
b
usiness choices
for Company C.
For
example,
on more
than
one
occasion, Honig or
Stetson
d
irected Company C's
CEO to name Honig's
choice to
Company
C's
board. On January 15,
2015, Honig and
Stetson decided that
Company C needed to employ
different attorneys and
s
hortly
thereafter directed
Company C's CEO which
counsel to retain in connection
with
C
ompany C's
corporate filings. And
on August 15, 2016, at
Honig's and Stetson's
direction,
as
a
condition to
HSCI providing
additional. financing to
Company C, HSCI and
Company
C's
CEO
executed a
letter agreement
requiring Company C to
hire the public relations firm that
H
onig and Stetson had
selected.
36

4. False Beneficial Ow~zership
Repofts by Ho~zig and Associates
118.
Given the agreement
among Honig, Brauser, Groussman, Frost,
Stetson,
and
O'Rourke to
buy, hold and/or dispose
of their Company C shares
in
concert; the group's
d
irection of
Company
C
management and policies; and
their combined share ownership, all of
the
members of the group were
required to make Schedule
13D
filings that
they did not make.
They did
not make the appropriate filings so
that the investing public would not
discover their
c
ontrol over Company C, and to obscure
from investors
their
planned
pump
-and
-dump scheme.
1
19.
Stetson and
HSCI
were
obligated to make a Schedule
13D filing
as
of July
2014,
after Company C became public and
they acquired beneficial
ownership of
more
than
5%
of Company C
shares. Similarly, as of the
closing of the private placement financings in
April
2015,
Groussman (Melechdavid) and O'Rourke (ATG)
were each obligated to make a Schedule
13D
filing, disclosing
their own respective holdings and that
each
was a
member of the group
b
ecause they
were acting with one
another
and
with Stetson, Honig, and Frost
for
the purpose
of
a
cquiring,
holding or disposing of Company C shares,
and collectively owned greater than 5% of
C
ompany C's
outstanding
shares.
1
20.
Even
though
Frost and
FGIT acquired the
Company
C
shares with an intention
to
control management, Frost and
FGIT made a Schedule 13G
filing on April 10,
2015
i
ncorrectly indicating that they were
passive investors.
Moreover,
the
Schedule 13G stated that
Frost and
FGIT had a 6.86%
ownership percentage, and did not
disclose they were working with
H
onig, Stetson, O'Rourke,
Brauser, and
Groussman,
and
that
they,
with the other members of
t
heir group, sought to
direct and control management.
Nor did Frost file a Schedule 13D for
Opko
or
Southern Biotech, in which those companies should have
disclosed both their own
holdings and
that they, too, were
each
a
member of the group. Instead, Frost
improperly
made
37

four
Schedule 13G/A filings on
April 10, 2015, February 8, 2016,
February
3, 2017,
and January
18, 2018,
ignoring the fact that he was
ineligible to file a Schedule
13G
because he was
not a
p
assive investor.
1
21. Other Defendants who
invested in Company C also
improperly
made
Schedule
13G
filings,
notwithstanding that these Defendants
were
not
passive investors, and also failed to
disclose
their membership in the
group, in violation
of an
express
disclosure requirement. For
e
xample, Honig filed a Schedule 13G
on February 17, 2017
disclosing only his 6.22%
ownership
t
hrough GRQ;
Stetson
filed a
Schedule 13G on
September
19, 2017,
disclosing only his 5.64%
o
wnership through HSCI,
Brauser filed a Schedule 13G
on February 2,
2017,
disclosing only his
5.44%
ownership through
Grander. Each of these Defendants should have
made Schedule 13D
filings because they
were not passive investors,
and each should have disclosed the
existence of a
g
roup.
Additionally,
a
Schedule 13D filed by
Stetson on February 12, 2018, a Schedule
13D
filed by
Honig on February 13, 2018,
and a Schedule
13D/A
filed by
Honig on February 16,
2018 also failed to
disclose the existence
of
a
group.
FIRST
CLAIM FOR RELIEF
V
iolations of
Section
10(b)
of the Exchange Act and Rule lOb-5
(Against
Honig, Stetson, Brauser, O'Rourke,
GRQ, Grander, HSCI, and Maza)
122. The
Commission realleges and
incorporates by reference herein each and
every
a
llegation contained
in paragraphs 1 through 121
of
this
Complaint.
123. By
engaging in the acts and conduct
described in this Complaint,
Defendants
Honig, Stetson,
Brauser, O'Rourke,
GRQ, Grander, HSCI, and Maza, with scienter,
directly or
indirectly,
singly or in concert, by use
of
the means
or instruments of transportation
or
c
ommunication in interstate commerce, or
of
the mails,
or of the facilities of a national
securities
e
xchange, in connection
with
the
purchase or sale of
Company A, Company Band/or
Company

C
securities, have: (a)
employed devices, schemes,
or artifices to defraud;
(b) made
untrue statements
of material facts or omitted to
state material facts
necessary in order
to
make the statements
made, in light of the
circumstances under which they were
made, not
misleading;
and/or (c) engaged
in
acts, practices,
or courses
of
business
which operated or would
o
perate as a fraud
or deceit upon any person.
124. By
reason of the foregoing,
Honig, Stetson, Brauser, O'Rourke,
GRQ,
G
rander, HSCI, and Maza,
directly or indirectly,
singly or in concert, violated
Section 10(b) of
the
Exchange Act [15 U.S.C. §
78j(b)] and Rule lOb-5
thereunder [17 C.F.R. § 240.1Ob-5].
SECOND
CLAIM FOR RELIEF
Violations of
Section 17(a)(1)-(3) of the Securities Act
(Against Honig,
Stetson, Brauser, O'Rourke,
GRQ, Grander, HSCI, and Maza)
125.
The
Commission
realleges
and incorporates by
reference herein each and every
a
llegation contained
in paragraphs 1
through 121 of this Complaint.
1
26.
By engaging
in the acts and conduct
described in this Complaint, Defendants
Honig,
Stetson, Brauser, O'Rourke,
GRQ, Grander, HSCI, and Maza,
directly or indirectly,
s
ingly or in concert, by
use of the means
or instruments of
transportation or communication in
i
nterstate commerce,
in
the
offer or sale
of Company A, Company B,
and/or Company
C
securities,
have: (a)
with scienter, employed devices,
schemes, and artifices to defraud; (b)
k
nowingly,
recklessly or negligently obtained
money or property by means
of any untrue
s
tatements of a
material fact or omitted to state
a material fact
necessary in order to make the
s
tatements made,
in the light of the
circumstances under which they were
made, not misleading;
o
r
(c)
knowingly, recklessly or
negligently engaged in transactions,
practices, or courses of
b
usiness
which operated or would operate as a
fraud or deceit upon
purchasers of securities of
C
ompany A,
Company B, and/or Company C.
39

127. By reason of the
foregoing, Honig, Stetson, Brauser,
O'Rourke, GRQ,
G
rander, HSCI, and Maza, directly or
indirectly, singly or in
concert, have violated, are
v
iolating, and unless restrained and enjoined,
will
continue to
violate Sections
17(a)(1)-(3)
of
the
Securities Act
[15 U.S.C. §§ 77q(a)(1)-(3)].
THIRD CLAIM FOR RELIEF
Violations of Section 10(b)
of
the Exchange Act and Rule lOb-5(b)
(Against Frost,
FGIT, Ford, Ladd, and Keller)
128. The Commission realleges
and
incorporates by
reference herein each
and
every
a
llegation contained in paragraphs
1 through 121 of this
Complaint.
1
29.
By engaging in the acts and conduct described
in this
Complaint, Defendants
Frost,
FGIT, Ford, Ladd, and Keller,
with scienter, directly or indirectly, singly or
in concert, by
use of the means
or instruments of transportation or communication
in
interstate commerce, or of
the
mails, or of the facilities
of
a
national securities exchange, in connection with
the
purchase or
sale
of Company A, Company Band/or
Company
C securities, have made untrue statements
of
material facts
or omitted to state material facts necessary
in order
to make the statements made,
in light of the circumstances
under which they were made, not misleading.
130. By
reason of
the
foregoing, Frost, FGIT, Ford, Ladd, and Keller, directly or
indirectly, singly or
in
concert, violated
Section 10(b) of the Exchange Act
[15 U.S.C. §  78j(b)]
and
Rule lOb-5(b)
thereunder
[17
C.F.R. §  240.1Ob-5(b)].
FOURTH CLAIM FOR RELIEF
Violations
of
Section
17(a)(2) of
the Securities Act
(Against Frost, FGIT, Ford, Ladd, and Keller)
131.
The
Commission realleges and incorporates by reference herein each and every
allegation contained
in paragraphs 1 through 121 of this Complaint.
132. By engaging
in
the acts and conduct described
in
this Complaint, Defendants
. ~

Frost,
FGIT, Ford, Ladd, and
Keller, knowingly,
recklessly or negligently, directly
or indirectly,
s
ingly or in concert, by use
of
the
means or instruments
of transportation or
communication in
i
nterstate
commerce,
in
the
offer or sale of
Company A, Company B, and/or
Company
C
securities, have
obtained money
or property
by
means of
any
untrue
statements of a material fact
o
r omitted to state a
material fact
necessary in order to make the statements made,
in the light of
the
circumstances
under which they were made, not
misleading.
133. By
reason of the foregoing, Frost,
FGIT, Ford, Ladd, and Keller,
directly or
i
ndirectly, singly or in
concert, have violated, are
violating, and unless restrained and enjoined,
will
continue to violate
Section 17(a)(2) of the
Securities Act [15 U.S.C. §  77q(a)(2)].
FIFTH CLAIM
FOR RELIEF
Violations
of Section 10(b) of the
Exchange Act and Rules lOb-5(a) and (c)
(Against ATG,
Southern
Biotech,
and
SCI)
134. The
Commission realleges and
incorporates by reference
herein each
and
every
a
llegation contained in
paragraphs 1 through 121 of this
Complaint.
135.
By engaging in the acts
and conduct described
in
this,
Complaint, Defendants
A
TG,
Southern
Biotech, and SCI,
with scienter, directly or
indirectly, singly or in
concert,
by use
o
f
the
means or
instruments of
transportation or communication in interstate commerce,
or of the
mails,
or of the facilities
of
a
national securities
exchange, in connection
with
the purchase
or
sale
of Company A,
Company Band/or
Company
C
securities, have: (a) employed devices,
s
chemes, or artifices to
defraud; or (b)
engaged in acts, practices,
or
courses
of
business
which
o
perated or would
operate as a fraud
or deceit upon any person.
136.
By reason of the
foregoing, ATG, Southern
Biotech,
and
SCI, directly or
indirectly,
singly or in concert, violated
Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)],
and Rules
lOb-5(a) and (c)
thereunder [17
C.F.R. §§
240.1Ob-5(a)
and (c)].
41

SIXTH CLAIM FOR RELIEF
Violations
of
Sections
17(a)(1) and (3) of the Securities Act
(Against ATG,
Southern Biotech, and SCI)
137.
The Commission realleges and incorporates by reference herein each and every
a
llegation contained in paragraphs 1
through 121 of
this Complaint.
1
38.
By engaging in the acts and conduct described in this Complaint, Defendants
ATG,
Southern Biotech,
and
SCI directly or indirectly, singly or in concert, by use of the means
or instruments
of transportation or communication in interstate commerce, in the offer or sale of
Company
A, Company B, and/or Company C securities, have (a) with scienter, employed
devices, schemes, and artifices
to defraud; or (b) knowingly, recklessly or negligently
engaged
in
t
ransactions, practices,
or
courses
of
business
which operated or would operate
as a fraud
or
deceit
upon purchasers of securities
of Company A, Company B, and/or Company
C.
1
39.
By reason of the foregoing, ATG, Southern Biotech, and SCI, directly or
indirectly,
singly or in
concert, have
violated,
are
violating, and unless restrained
and enjoined,
w
ill continue to violate Sections 17(a)(1) and (3)
of
the Securities Act [15 U.S.C. §§ 77q(a)(1)
and (3)].
SEVENTH CLAIM FOR RELIEF
Aiding
and
Abetting
Violations
of Section
1
0(b)
of the Exchange Act and Rules lOb-5(a) and (c) Thereunder
(Against Frost,
Groussman, FGIT, Melechdavid,
Opko, Ladd, and
Keller)
140. The
Commission
realleges and
incorporates by
reference
herein each
and
every
allegation contained
in paragraphs 1 through 121 of this
Complaint.
1
41. By engaging in
the acts and
conduct described in
this Complaint, Defendants
Frost, Groussman,
FGIT,
Melechdavid, Opko, Ladd,
and Keller directly or indirectly, singly or
in concert, provided
knowing
and substantial assistance to
Honig,
Stetson,
Brauser,
and
O'Rourke, who,
directly or indirectly, singly or in concert with others, in connection with the
:~►

purchase or sale of a security, with
scienter,
used
the means or
instrumentalities
of
interstate
coininerce or of the mails or of a facility of a
national
securities exchange to (a) employ devices,
schemes, or artifices to defraud; and (b) engage
in acts, practices, or
courses
of business which
operated
or would operate as a fraud or deceit upon others.
142.
By reason of
the
foregoing, Frost, Groussman, FGIT, Melechdavid, Opko,
Ladd, and Keller, aided and abetted, and unless
restrained and enjoined, will
continue
aiding
and
abetting, Honig's, Stetson's, Brauser's, and
O'Rourke's violations of Section
10(b)
of the
Exchange Act [15 U.S.C. § 78j(b)], and Rules lOb-5(a)
and (c) thereunder
[17
C.F.R. §
240.1Ob-
5(a) and (c)] in violation of
Section
20(e)
of
the
Exchange Act [15
U.S.C. §  78t(e)].
EIGHTH CLAIM
FOR RELIEF
A
iding
and
Abetting
Violations
of Sections 17(a)(1) and (3) of the Securities
Act
(Against Frost, Groussman, FGIT, Melechdavid, Opko, Ladd, and Keller)
143. The
Commission
realleges
and incorporates by reference herein each
and
every
a
llegation contained in paragraphs 1 through
121 of
this Complaint.
144. By engaging in the acts and conduct described in this Complaint, Defendants
Frost,
Groussman, FGIT, Melechdavid, Opko, Ladd, and Keller directly or indirectly, singly or
in concert, provided
knowing
and
substantial assistance
to
Honig, Stetson, Brauser,
and
O'Rourke, who,
directly or indirectly, singly or in
concert
with
others,
in the offer or
sale
of
a
security, used the means
or
instruments
of transportation or communication in
interstate
commerce
or used
the snails to (a)
with scienter employed devices schemes, and
artifices to
defraud;
or
(b)
knowingly, recklessly or negligently engaged in transactions,
practices,
or
courses
of business
which
operated
or
would
operate as a fraud or deceit upon purchasers of securities of
Company
A, Company B, and/or Company C.
145.
By
reason of the foregoing, Frost,
Groussman, FGIT,
Melechdavid, Opko,
4
3

Ladd, and
Keller, aided
and
abetted, and unless
restrained and enjoined, will continue aiding and
abetting Honig's,
Stetson's, Brauser's, and O'Rourke's
violations of Sections 17(a)(1) and (3) of
the Securities Act
[15 U.S.C. §§
77q(a)(1)
and (3)],
in violation of Section 15(b) of the Securities
A
ct
[15 U.S.C. § 77o(b)].
NINTH CLAIM FOR RELIEF
V
iolations of Section 9(a)(1) of the Exchange Act
(Against Honig, Brauser, O'Rourke,
Groussman, ATG, and Melechdavid)
146.
The Commission realleges and
incorporates by reference herein each and every
a
llegation contained in paragraphs 1
through 121 of
this
Complaint.
147.
By engaging in the acts and conduct
described in this Complaint, Defendants
Honig,
Brauser, O'Rourke, Groussman, ATG, and Melechdavid,
directly or indirectly, singly or
in concert , by use
of
the mails
or the means or instrumentalities
of
interstate commerce,
or of
a
f
acility
of
a
national securities exchange
for
the
purpose of creating a false or misleading
appearance
of
active
trading in Company A, Company
Band/or Company
C
securities, or a false
o
r misleading appearance
with respect to the market for
Company
A, Company
Band/or
C
ompany
C
securities, entered
an order or
orders
for the purchase and/or sale of such security
with the
knowledge that an
order or
orders of
substantially the same size, at substantially the
same tune and
substantially the same price, for the
sale and/or purchase of such security, had
b
een or
would be
entered by
or for
the same
or different parties.
1
48.
By virtue of the
foregoing, Honig, Stetson, Brauser, O'Rourke, Groussman,
ATG,
and
Melechdavid violated, and unless
restrained and enjoined, will continue
violating
S
ection 9(a)(1) of the Exchange Act [15 U.S.C. §
78i(a)(1)].
..

TENTH CLAIM FOR RELIEF
Violations of Section 9(a)(2) of the
Exchange Act
(Against Honig, O'Rourke, and
ATG)
1
49.
The Commission realleges and incorporates by
reference
herein each
and every
allegation contained
in
paragraphs
1
through
121 of
this Complaint.
150. By engaging in the acts and conduct described in this Complaint,
Defendants
Honig, O'Rourke, and ATG, directly or indirectly, singly or in
concert , by use
of
the mails or
the
means or instrumentalities of interstate commerce, or of a
facility
of
a
national
securities
e
xchange effected, alone or with one or more other persons, a series of
transactions in the
securities
of Company Aand/or Company B creating actual or
apparent active trading in such
security,
or raising or depressing
the price
of such security, for
the purpose
of
inducing the
purchase
or
sale
of such
security by others.
151. By virtue of the foregoing, Honig, O'Rourke, and ATG
violated, and unless
r
estrained
and enjoined, will continue violating Section 9(a)(2) of
the Exchange Act [15 U.S.C. §
78i(a)(2)]•
ELEVENTH CLAIM FOR RELIEF
Sale
of
Unregistered Securities
in Violation of
Sections 5(a) and (c) of the
Securities Act
(Against Honig, Brauser, Groussman, Frost, Grander,
Melechdavid, and Alpha)
152. The Commission realleges and
incorporates
by
reference
herein
each and every
a
llegation contained in paragraphs 1 through 121 of this Complaint.
153. By engaging in the acts and. conduct described in this
Complaint, Defendants
Honig, Brauser, Groussman, Frost, Grander, Melechdavid, and Alpha, directly or
indirectly,
singly or in concert, made use of the means or instruments of transportation or
communication in
interstate commerce or of the mails to offer or sell securities through the use or
medium of a
p
rospectus
or otherwise, or
carried
or
caused to be carried through the mails
or
in interstate
4
5

coimnerce,
by means or instruments
of transportation, securities for the purpose of sale or for
delivery
after sale, when no
registration
statement had
been filed or was in
effect
as
to
such
securities,
and when no exemption
from registration was applicable. The shares of Company A
t
hat Honig,
Brauser, Groussman, Frost, Grander, Melechdavid, and Alpha offered and sold as
alleged
herein constitute "securities" as
defined in the Securities Act and the Exchange Act.
154. By reason of the
foregoing, Honig, Brauser, Groussman, Frost, Grander,
M
elechdavid, and Alpha have violated and unless
restrained
and
enjoined will
continue
to violate
Sections 5(a)
and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a)
& (c)].
TWELTH CLAIM
FOR RELIEF
Violations of
Section
13(d)
of the Exchange Act and Rule 13d-1(a) Thereunder
(Against
Honig, Stetson, Brauser, O'Rourke,
Groussman,
Frost, ATG,
FGIT, GRQ,
Grander, HSCI, Melechdavid, Opko,
Southern Biotech, and SCI)
1
55.
The Commission realleges and incorporates by reference
herein each
and
every
a
llegation contained
in
paragraphs
1 through 121 of this Complaint.
1
56.
Pursuant to Exchange Act
Section 13(d)(1) and Rule
13d-1(a)
thereunder,
persons who
directly or indirectly acquire beneficial
ownership of
more
than
5%
of
a Section
12-
registered class of equity securities
are required to file a Schedule 13D, or, in limited
circumstances, a Schedule 13G.
Section 13(d)(3) plainly states that "act[ing] as a ... group" in
furtherance of
acquiring, holding, or disposing of equity securities is enough to establish the
group as a single
"person." When
a
group is required to make a Schedule 13D filing, that group
must "identify
all
members
of the group."
157. Defendants
Honig, Stetson, Brauser, O'Rourke, Groussman, ATG,
GRQ,
Grander,
Melechdavid,
and
SCI acquired and held beneficial ownership of more than 5%shares
in Company B from on
or
about
October
8, 2015
to at least on or about May 20, 2016.
1
58.
Honig, Stetson, and HSCI acquired and held
beneficial ownership of
more
than
. ~

5%shares in
Company C from on
or about
February 2014.
1
59.
Honig, Stetson,
Brauser, O'Rourke,
Groussinan, Frost, ATG, FGIT, GRQ,
G
rander, HSCI,
Melechdavid, Opko,
Southern
Biotech, and SCI acquired and held
beneficial
o
wnership of more
than
5%shares
in
Company C from on or about
April
2015
to at least on or
a
bout
December 2015.
160.
Honig, Stetson,
Brauser, O'Rourke,
Groussinan, Frost, ATG, FGIT, GRQ,
G
rander, HSCI,
Melechdavid, Opko,
Southern
Biotech,
and
SCI were sufficiently interrelated
that
they constituted a
group for the
purposes of Exchange Act
Section 13(d).
161.
By engaging in the acts
and conduct described
in
this
Complaint, Defendants
Honig,
Stetson,
Brauser, O'Rourke,
Groussman, Frost, ATG, FGIT,
GRQ, Grander, HSCI,
Melechdavid,
Opko,
Southern Biotech, and SCI were
each under an obligation to file
with
the
C
ommission true
and accurate reports
with respect to
their ownership of the Company B and
C
ompany
C
securities, and
failed to do so.
162.
By reason
of
the
foregoing,
Honig, Stetson, Brauser, O'Rourke,
Groussinan,
F
rost, ATG,
FGIT, GRQ, Grander,
HSCI, Melechdavid, Opko,
Southern Biotech, and SCI
v
iolated, and unless
enjoined and restrained
will continue to violate,
Section 13(d)(1) of the
E
xchange Act [15
U.S.C. § 78m(d)], and
Rule 13d-1(a)
thereunder
[17
C.F.R. § 240.13d-1(a)].
T
HIRTEENTH CLAIM FOR
RELIEF
Aiding and
Abetting Violations of
Section 13(a) of the Exchange Act and
Rules
12b-20 and 13a-1
Thereunder
(Against
Ladd)
1
63.
The
Commission realleges and
incorporates by reference
herein each
and
every
a
llegation contained
in
paragraphs
1
through 121 of this Complaint.
164.
By engaging in the
acts and conduct
described in this Complaint,
Company B
violated
Section 13(a)
of
the
Exchange Act
[15 U.S.C. § 78m(a)] and
Rules 12b-20
[17
C.F.R. §
4
7

240.12b-20] and
13a-1
[17
C.F.R. § 240.13a-1(a)]
thereunder, which
require issuers
of
registered
s
ecurities
under
the Exchange
Act to file
annual
reports
on Fonn 10-K with
the
Commission
that,
a
mong
other
things,
do
not
contain untrue statements
of material
fact
or
omit to state
material
i
nformation necessary in order to snake
the required statements, in the light of the circumstances
under
which they are made, not
misleading.
165.
By engaging in the acts and conduct described
in
this Complaint, Defendant
Ladd provided
knowing
and
substantial assistance to
Company
B's
filing of
a materially false
a
nd
misleading annual
report
on Form 10-K.
166.
By
reason
of
the
foregoing, Ladd aided and abetted, and unless restrained and
enjoined,
will continue aiding and
abetting, Company B's violations of Section 13(a) of the
Exchange
Act [15 U.S.C. § 78m(a)], and Rules
12b-20
[17
C.F.R. § 240.12b-20]
and 13a-1(a)
t
hereunder [17
C.F.R. § 240.13a-1(a)], in
violation of Section
20(e)
of
the Exchange Act [15
U.S.C. §
78t(e)].
FOURTEENTH CLAIM FOR RELIEF
Aiding and
Abetting
Violations
of Section 15(d) of the Exchange Act and
Rule 15d-1
Thereunder
(Against
Maza and Keller)
167.
The Commission realleges and incorporates by reference
herein each
and
every
a
llegation contained in paragraphs 1 through
121 of this
Complaint.
1
68.
By engaging in the acts and
conduct described in
this
Complaint, Company A
violated
Section 15(d) of the Exchange Act [15 U.S.C. §
78o(d)] and Rule 15d-1 thereunder
[17
C
.F.R. § 240.15d-1 ], which require issuers
of registered securities under the Securities Act to file
a
nnual
reports
on Form 10-K with the
Commission that, among other things, do not contain
untrue statements
of material fact or omit to state
material information necessary in order
to
make
the
required statements,
in
the light
of the circumstances under which they are made, not
~;

misleading.
1
69.
By engaging in
the acts and conduct described in this Complaint,
Defendants
M
aza and
Keller provided knowing
and
substantial
assistance to Company A's filing of a
materially false and
misleading
annual report on Fonn 10-K.
170. By reason of the foregoing,
Maza
and Keller
aided and abetted, and
unless
restrained and
enjoined, will
continue
aiding
and
abetting,
Company A's violations of
Section
15(d)
of
the Exchange Act [15 U.S.C. § 78o(d)] and Rule 15d-1 thereunder
[17
C.F.R. §
2
40.15d-1], in violation of Section
20(e)
of
the Exchange Act [15 U.S.C. §
78t(e)].
F
IFTEENTH CLAIM
FOR
RELIEF
V
iolations of Section
17(b)
of
the Securities Act
(Against Ford)
171. The Commission
realleges
and
incorporates by reference herein each and every
a
llegation
contained
in
paragraphs
1 through 121 of
this Complaint.
172. By engaging in the acts and conduct described in
this Complaint, Defendant
F
ord
directly or indirectly, singly or in concert,
by use
of
the means
or
instruments of
t
ransportation or communication in
interstate commerce,
or
by the use of the
mails,
in
the
offer
or sale
of Company A, and/or Company
C securities, has published, given
publicity to,
or
circulated
any
notice, circular, advertisement, newspaper, article, letter,
investment service,
or
c
ommunication which,
though not purporting to offer a security for sale,
described such security
for a
consideration
received
or
to be received, directly or indirectly, from an issuer, underwriter,
or
dealer,
without
fully disclosing
the receipt, whether past or prospective, of such consideration
and the amount
thereof.
1
73.
By
reason of the
foregoing,
Ford, directly or indirectly, has
violated, is
violating, and unless restrained and enjoined, will continue to
violate
Section
17(b) of the
.
•

Securities Act [15 U.S.C. §  77q(b)].
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that the Court grant the following
relief, in a
Final
Judgment:
I.
Finding that Defendants violated the federal securities laws and rules promulgated
t
hereunder as alleged against them herein;
II.
Permanently restraining and enjoining Honig, Brauser, Frost, Groussman, Grander,
Melechdavid, and Alpha,
their
agents, servants, employees
and attorneys and all
persons
in
active concert or
participation
with them who receive
actual
notice
of
the injunction by personal
service
or otherwise, and each of them, from violating, directly or indirectly, Sections 5(a)
and
(c) of the Securities Act [15 U.S.C. §§ 77e(a) and
(c)];
I
II.
Permanently restraining and enjoining Honig, Stetson, Brauser, O'Rourke, Frost,
G
roussman,
Ladd,
Maza, Keller,
Ford,
ATG, FGIT, GRQ, Grander, HSCI,
Melechdavid, Opko,
S
outhern Biotech, and SCI, their
agents,
servants, employees and
attorneys
and all
persons
in
active concert
or participation with them
who
receive actual notice of the injunction by personal
service
or otherwise, and each of them, from violating, directly or indirectly, Section
17(a)
of
the
Securities Act
[15 U.S.C. § 77q(a)];
50

IV.
Permanently restraining
and
enjoining Ford, his
agents, servants, employees and
attorneys and all persons in active concert or participation with them
who receive actual notice of
the
injunction
by
personal
service or otherwise, and each
of
them, from violating, directly or
indirectly, Section 17(b) of the Securities Act [15 U.S.C. §  77q(b)];
V.
Permanently restraining and enjoining Honig, Brauser,
O'Rourke, Groussman, ATG, and
M
elechdavid,
their respective
agents, servants, employees and attorneys and all persons in active
concert
or participation with them,
who receive
actual
notice
of
the injunction by personal
service
or
otherwise, and
each of theirs, from
future violations of Section 9(a) of the
Exchange
Act [15 U.S.C. §  78i(a)].
VI.
Permanently restraining
and
enjoining
Honig, Stetson, Brauser, O'Rourke,
Frost,
Groussman, Ladd, Maza, Keller, Ford, ATG, FGIT, GRQ, Grander, HSCI,
Melechdavid, Opko,
S
outhern Biotech,
and
SCI, their respective
agents, servants, employees and attorneys and all
persons
in active
concert
or participation with them,
who receive
actual
notice of the injunction
by
personal
service
or
otherwise, and
each of them, fr
om future violations of Section 10(b) of the
Exchange Act [15 U.S.C. § 78j(b)] and Rule lOb-5
thereunder
[17 C.F.R. §
240.1Ob-5];
V
II.
Permanently restraining and enjoining Honig, Stetson, Brauser,
O'Rourke,
Frost,
G
roussman, ATG, FGIT, GRQ, Grander, HSCI,
Melechdavid, Opko, Southern Biotech, and SCI,
their respective agents, servants, employees and attorneys and
all
persons in
active
concert or
participation with them, who receive actual notice of the injunction by personal
service
or
51

otherwise, and
each
of them, from future
violations
of
Section 13(d) of the
Exchange Act [15
U.S.C. § 78in(d)] and Rule 13d-1(a) thereunder
[17
C.F.R. §
240.13d-1(a)];
V
III.
Permanently restraining
and enjoining Ladd, his respective
agents, servants,
employees
and attorneys and
all
persons in active concert or participation
with them, who
receive actual
notice of the injunction by personal service or
otherwise, and each of them, from
future
violations of Section 13(a) of the Exchange
Act [15 U.S.C. §  78m(a)]
and Rules 12b-20 [17
C.F.R. § 240.12b-20] and 13a-1 thereunder
[17 C.F.R. §  240.13a-1];
IX.
Permanently restraining
and enjoining Maza and Keller, their
respective agents,
servants,
employees and attorneys and all persons in
active concert
or
participation with them,
who
receive actual notice of the injunction
by personal service or otherwise,
and
each of
them, from
a
iding
and
abetting
future violations of Section 15(d) of the
Exchange Act [15 U.S.C. §  78o(d)]
and Rule 15d-1 thereunder [17 C.F.R. § 240.15d-1];
/~
Permanently barring
Ladd, Maza and Keller from acting as an officer or
director of a
public company
pursuant to
Section
20(e) of the Securities Act
[15 U.S.C. §  77t(e)] and Section
21(d)(2) of the
Exchange
Act
[15 U.S.C. §  78u(d)(2)];
Permanently prohibiting all
Defendants from participating in any offering of
penny stock
pursuant to Section 20(g) of the
Securities Act [15 U.S.C. § 77t(g)]
and
Section
21(d)(6) of the
Exchange
Act [15
U.S.C. §
78u(d)(6)].
52

XII.
O
rdering
Defendants
to
disgorge
all
of
the
ill-gotten
gains
fr
om
the
violations
alleged
in
t
his
complaint,
an
d
ordering
them
to
pay
prejudgment
interest
thereon;
X
III.
O
rdering
Defendants
to
pay
civil
money
penalties
pursuant
to
Section
20(d)(2)
of
the
S
ecurities
Act
[15
U.S.C.
§
77t(d)(2)]
an
d
Section
21(d)(3)
of
the
Exchange
Act
[15
U.S.C.
§
78u(d)(3)];
and
XIV.
G
ranting
such
other
and
further
relief
as
this
Court
deems
just
and
proper.
J
URY
DEMAND
P
ursuant
to
Rule
38
of
the
Federal
Rules
of
Civil
Procedure,
the
Commission
demands
t
ri
al
by
jury
as
to
all
issues
so
triable.
D
ated:
September
7,
2018
N
ew
York,
New
York
Sanjay
Wadhwa
M
ichael
Paley
C
haru
Chandrasekhar
N
an
cy
Brown
K
atherine
Bromberg
J
on
Daniels
A
ttorneys
for
Plaintiff
S
ECURITIES
AND
EXCHANGE
COMMISSION
N
ew
York
Regional
Office
2
00
Vesey
Street,
Suite
400
N
ew
York,
New
York
10281-1022
(
212)
336-1023
(Brown)
E
mail:
[email protected]
5
3

SANJAY WADHWA
SENIOR ASSOCIATE REGIONAL DIRECTOR
Michael Paley
Charu Chandrasekhar
Nancy Brown
Katherine Bromberg
Jon Daniels
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
200 Vesey Street, Suite 400
New York, New York 10281-1022
(212) 336-1023 (Brown)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

SECURITIES AND EXCHANGE COMMISSION,

Plaintiff,

-- against --

BARRY C. HONIG, JOHN STETSON,
MICHAEL BRAUSER, JOHN R. O'ROURKE III,
MARK GROUSSMAN, PHILLIP FROST,
ROBERT LADD, ELLIOT MAZA, BRIAN KELLER,
JOHN H. FORD, ALPHA CAPITAL ANSTALT, ATG
CAPITAL LLC, FROST GAMMA INVESTMENTS
TRUST, GRQ CONSULTANTS, INC.,
HS CONTRARIAN INVESTMENTS, LLC,
GRANDER HOLDINGS, INC., MELECHDAVID,
INC., OPKO HEALTH, INC.,
SOUTHERN BIOTECH, INC., and
STETSON CAPITAL INVESTMENTS INC.,

Defendants.

X

18 Civ. ( )

ECF CASE

COMPLAINT
AND JURY DEMAND

----------------------------------------------------------------------- x

Plaintiff Securities and Exchange Commission ("Commission"), for its Complaint against

Defendants Barry C. Honig ("Honig"), John Stetson ("Stetson"), Michael Brauser ("Brauser"),

John R. O'Rourke III ("O'Rourke"), Mark Groussman ("Groussman"), Phillip Frost ("Frost"),

Robert Ladd ("Ladd"), Elliot Maza ("Maza"), Brian Keller ("Keller"), John H. Ford ("Ford"),

Case 1:18-cv-08175   Document 1   Filed 09/07/18   Page 1 of 53



Alpha Capital Anstalt ("Alpha"), ATG Capital LLC ("ATG"), Frost Gamma Investments Trust

("FGIT"), GRQ Consultants, Inc. ("GRQ"), HS Contrarian Investments, LLC ("HSCI"), Grander

Holdings, Inc. ("Grander"), Melechdavid, Inc. ("Melechdavid"), OPKO Health, Inc. ("Opko"),

Southern Biotech, Inc. ("Southern Biotech"), and Stetson Capital Investments Inc. ("SCI")

(collectively, "Defendants"), alleges as follows:

SUMMARY OF ALLEGATIONS

This case involves three highly profitable "pump-and-dump" schemes

perpetrated by Honig, Stetson, Brauser, O'Rourke, Groussman, and Frost, and their entities

GRQ, SCI, Grander, HSCI, Melechdavid, ATG, Opko, FGIT, and Southern Biotech from 2013

through 2018 in the stock of three public companies (Company A, Company B, and Company C)

that, while enriching Defendants by millions of dollars, left retail investors holding virtually

worthless shares.

2. Across all three schemes, Honig was the primary strategist, calling upon other

Defendants to buy or sell stock, arrange for the issuance of shares, negotiate transactions, or

engage in promotional activity. In each scheme, Honig orchestrated his and his associates'

acquisition of a large quantity of the issuer's stock at steep discounts, either by acquiring a shell

and executing a reverse merger or by participating in financings on terms highly unfavorable to

the company. In every scheme, Honig, and soiree combination of Stetson, Brauser, O'Rourke,

Groussman and Frost, either explicitly or tacitly agreed to buy, hold or sell their shares in

coordination with one another, knowing that a pump and dump was in the offing that would

allow them all to profit handsomely. Once Honig and his associates had secured substantial

ownership of the issuer, they acted as an undisclosed control group, directing the issuer's

management for their benefit, including orchestrating transactions designed to create market

2

Case 1:18-cv-08175   Document 1   Filed 09/07/18   Page 2 of 53



interest in the company or to solidify their control.

To profit from their investment, in each scheme, Honig and his associates

would arrange and pay for the promotion of the stock, directing their co-defendant Ford, or a

similar promoter, to write favorable and materially misleading articles about the company whose

stock price they wanted to inflate. In several instances, to magnify the intended boost to volume

and price that would follow a promotional article's release, Honig, Brauser, O'Rourke,

Groussman, Melechdavid and ATG engaged in pre-release manipulative trading to generate a

misleading picture of market interest in the company's stock, priming investor interest.

4. In connection with the Company B and Company C schemes, Honig, Brauser,

Stetson, O'Rourke, Frost and Groussman, as well as certain of their entities, also violated

beneficial ownership reporting requirements of the federal securities laws by failing to disclose

their group beneficial ownership of shares and the fact that as a group they were looking to

exercise (and, in fact, did exercise) control over the issuers.

Management of both Company A and Company B acted to further the

schemes. Defendants Maza (Company A's CEO), Keller (Company A's Chief Scientific Officer

and a Director) and Ladd (Company B's CEO), acted separately at the direction of Honig and his

confederates to take steps beneficial to that group at the expense of each company's public

shareholders, and signed public filings they knew to be false to hide the group's beneficial

ownership and existence.

6. Maza and Keller signed Company A's public filings, in which they knowingly

or recklessly omitted to disclose the share ownership as a group of Honig, Brauser, Frost,

Stetson, and Groussman, or the size of each of their holdings. Similarly, Company B's CEO,

Ladd, also signed false public filings, making material misstatements in them about the

3

Case 1:18-cv-08175   Document 1   Filed 09/07/18   Page 3 of 53



substantial group ownership of Company B shares held by Honig, Brauser, Stetson, O'Rourke,

and Groussman.

7. All told, the three schemes brought Defendants millions of dollars: Company

A's pump and dump generated for the Defendants more than $9.25 million in stock sales

proceeds, and Company B's pump and dump generated more than $9.5 million. And their most

recent venture, the pump and dump scheme with respect to Company C, brought in over $8.3

million in stock sales proceeds. In the wake of these schemes, public investors were left holding

virtually worthless stock.

VIOLATIONS

8. By virtue of the conduct alleged herein, each of the Defendants, directly or

indirectly, singly or in concert, violated and are otherwise liable for violations of the federal

securities laws as follows:

9. Honig violated:

• Sections 5(a) and (c) of the Securities Act of 1933 ("Securities Act") [15

U.S.C. §§ 77e(a) and (c)];

• Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)];

• Sections 9(a)(1) and (2) of the Securities Exchange Act of 1934 ("Exchange

Act") [15.U.S.C. §§ 78i(a)(1) and (2)];

• Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule lOb-5

thereunder [17 C.F.R. § 240.10b-5]; and

• Section 13(d) of the Exchange Act [15 U.S.C. § 78m(d)], and Rule 13d-1(a)

thereunder [17 C.F.R. § 240.13d-1(a)].

10. Stetson violated:

Case 1:18-cv-08175   Document 1   Filed 09/07/18   Page 4 of 53



• Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)];

• Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule lOb-5

thereunder [17 C.F.R. § 240.1Ob-5]; and

• Section 13(d) of the Exchange Act [15 U.S.C. § 78m(d)], and Rule 13d-1(a)

thereunder [17 C.F.R. § 240.13d-1(a)].

11. Brauser violated:

• Sections 5(a) and (c) of the Securities Act [15 U.S.C. §§ 77e(a) and (c)];

• Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)];

• Section 9(a)(1) of the Exchange Act [15.U.S.C. § 78i(a)(1)];

• Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule lOb-5

thereunder [17 C.F.R. § 240.1Ob-5]; and

• Section 13(d) of the Exchange Act [15 U.S.C. § 78m(d)], and Rule 13d-1(a)

thereunder [17 C.F.R. § 240.13d-1(a)].

12. O'Rourke violated:

• Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)];

• Sections 9(a)(1) and (2) of the Exchange Act [15.U.S.C. §§ 78i(a)(1) and (2)];

• Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule lOb-5

thereunder [17 C.F.R. § 240.1Ob-5]; and

• Section 13(d) of the Exchange Act [15 U.S.C. § 78m(d)], and Rule 13d-1(a)

thereunder [17 C.F.R. § 240.13d-1(a)].

13. Groussman violated:

• Sections 5(a) and (c) of the Securities Act [15 U.S.C. §§ 77e(a) and (c)];

• Section 9(a)(1) of the Exchange Act [15 U.S.C. § 78i(a)(1)];

5

Case 1:18-cv-08175   Document 1   Filed 09/07/18   Page 5 of 53



• Section 13(d) of the Exchange Act [15 U.S.C. § 78m(d)], and Rule 13d-1(a)

thereunder [17 C.F.R. § 240.13d-1(a)]; and

• Section 15(b) of the Securities Act [15 U.S.C. § 77o(b)] and Section 20(e) of

the Exchange Act [15 U.S.C. § 78t(e)] by aiding and abetting Honig's,

Stetson's, Brauser's, and O'Rourke's violations of Section 17(a)(1) and (3) of

the Securities Act [15 U.S.C. §§ 77q(a)(1) and (3)] and Section 10(b) of the

Exchange Act [15 U.S.C. § 78j(b)] and Rules lOb-5(a) and (c) thereunder [17

C.F.R. §§ 240.1Ob-5(a) and (c)].

14. Frost violated:

• Sections 5(a) and (c) of the Securities Act [15 U.S.C. §§ 77e(a) and (c)];

• Section 17(a)(2) of the Securities Act [15 U.S.C. § 77q(a)(2)];

• Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule lOb-5(b)

thereunder [17 C.F.R. §§ 240.1Ob-5(b)];

• Section 13(d) of the Exchange Act [15 U.S.C. § 78in(d)], and Rule 13d-1(a)

thereunder [17 C.F.R. § 240.13d-1(a)]; and

• Section 15(b) of the Securities Act [15 U.S.C. § 77o(b)] and Section 20(e) of

the Exchange Act [15 U.S.C. § 78t(e)] by aiding and abetting Honig's,

Stetson's, Brauser's, and O'Rourke's violations of Section 17(a)(1) and (3) of

the Securities Act [15 U.S.C. §§ 77q(a)(1) and (3)] and Section 10(b) of the

Exchange Act [15 U.S.C. § 78j(b)] and Rules lOb-5(a) and (c) thereunder X17

C.F.R. §§ 240.10b-5(a) and (c)].

15. Ladd violated:

• Section 17(a)(2) of the Securities Act [15 U.S.C. § 77q(a)(2)];

D

Case 1:18-cv-08175   Document 1   Filed 09/07/18   Page 6 of 53



• Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule lOb-5(b)

thereunder [17 C.F.R. § 240.1Ob-5(b)]; and

• Section 15(b) of the Securities Act [15 U.S.C. § 77o(b)] and Section 20(e) of

the Exchange Act [15 U.S.C. § 78t(e)] by aiding and abetting Honig's,

Stetson's, Brauser's, and O'Rourke's violations of Section 17(a)(1) and (3) of

the Securities Act [15 U.S.C. §§ 77q(a)(1) and (3)] and Section 10(b) of the

Exchange Act [15 U.S.C. § 78j(b)] and Rules lOb-5(a) and (c) thereunder [17

C.F.R. §§ 240.1Ob-5(a) and (c)] and by aiding and abetting Company B's

violations of Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)], and

Rules 12b-20 [17 C.F.R. § 240.12b-20] and 13a-1 thereunder [17 C.F.R. §

240.13 a-1 ] .

16. Maza violated:

• Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)];

• Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule lOb-5

thereunder [ 17 C.F.R. § 240.1 Ob-5]; and

• Section 20(e) of the Exchange Act [15 U.S.C. § 78t(e)] by aiding and abetting

Company A's violations of Section 15(d) of the Exchange Act [15 U.S.C. §

780], and Rule 15d-1 thereunder [17 C.F.R. § 240.15d-1].

17. Keller violated:

• Section 17(a)(2) of the Securities Act [15 U.S.C. § 77q(a)(2)];

• Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule lOb-5(b)

thereunder [17 C.F.R. § 240.1Ob-5(b)]; and

7

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• Section 15(b) of the Securities Act [15 U.S.C. § 77o(b)] and Section 20(e) of

the Exchange Act [15 U.S.C. § 78t(e)] by aiding and abetting Honig's,

Stetson's, Brauser's, and O'Rourke's violations of Section 17(a)(1) and (3) of

the Securities Act [15 U.S.C. §§ 77q(a)(1) and (3)] and Section 10(b) of the

Exchange Act [15 U.S.C. § 78j(b)], and Rules lOb-5(a) and (c) thereunder [17

C.F.R. §§ 240.1Ob-5(a) and (c)], and by aiding and abetting Company A's

violations of Section 15(d) of the Exchange Act [15 U.S.C. § 780], and Rule

15d-1 thereunder [17 C.F.R. § 240.15d-1].

18. Ford violated:

• Section 17(a)(2) of the Securities Act [15 U.S.C. § 77q(a)(2)];

• Section 17(b) of the Securities Act [15 U.S.C. § 77q(b)]; and

• Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule lOb-5(b)

thereunder [17 C.F.R. § 240.1Ob-5(b)].

19. Alpha violated:

• Sections 5(a) and (c) of the Securities Act [15 U.S.C. §§ 77e(a) and (c)].

20. ATG violated:

~ Sections 17(a)(1) and (3) of the Securities Act [15 U.S.C. §§ 77q(a)(1) and

~3)~~

• Sections 9(a)(1) and (2) of the Exchange Act [15.U.S.C. §§ 78i(a)(1) and (2)];

• Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rules lOb-5(a)

and (c) thereunder [17 C.F.R. §§ 240.1Ob-5(a) and (c)]; and

• Section 13(d) of the Exchange Act [15 U.S.C. § 78m(d)], and Rule 13d-1(a)

thereunder [17 C.F.R. § 240.13d-1(a)].

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21. GRQ violated:

~ Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)J;

• Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule lOb-5

thereunder [17 C.F.R. § 240.1Ob-5]; and

• Section 13(d) of the Exchange Act [15 U.S.C. § 78m(d)], and Rule 13d-1(a)

thereunder [17 C.F.R. § 240.13d-1(a)].

22. HSCI violated:

• Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)];

• Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule l Ob-5

thereunder [ 17 C.F.R. § 240.1 Ob-5]; and

• Section 13(d) of the Exchange Act [15 U.S.C. § 78in(d)], and Rule 13d-1(a)

thereunder [17 C.F.R. § 240.13d-1(a)].

23. Grander violated:

• Sections 5(a) and (c) of the Securities Act [15 U.S.C. §§ 77e(a) and (c)];

• Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)];

• Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule lOb-5

thereunder [17 C.F.R. § 240.1Ob-5]; and

• Section 13(d) of the Exchange Act [15 U.S.C. § 78m(d)], and Rule 13d-1(a)

thereunder [17 C.F.R. § 240.13d-1(a)].

24. Melechdavid violated:

• Sections 5(a) and (c) of the Securities Act [15 U.S.C. §§ 77e(a) and (c)];

• Section 9(a)(1) of the Exchange Act [15.U.S.C. § 78i(a)(1)];

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• Section 13(d) of the Exchange Act [15 U.S.C. § 78m(d)], and Rule 13d-1(a)

thereunder [17 C.F.R. § 240.13d-1(a)]; and

• Section 15(b) of the Securities Act [15 U.S.C. § 77o(b)] and Section 20(e) of

the Exchange Act [15 U.S.C. § 78t(e)] by aiding and abetting Honig's,

Stetson's, Brauser's, and O'Rourke's violations of Section 17(a)(1) and (3) of

the Securities Act [15 U.S.C. §§ 77q(a)(1) and (3)] and Section 10(b) of the

Exchange Act [15 U.S.C. § 78j(b)] and Rules lOb-5(a) and (c) thereunder [17

C.F.R. §§ 240.1Ob-5(a) and (c)].

25. Opko violated:

• Section 13(d) of the Exchange Act [15 U.S.C. § 78m(d)], and Rule 13d-1(a)

thereunder [17 C.F.R. § 240.13d-1(a)]; and

• Section 15(b) of the Securities Act [15 U.S.C. § 77o(b)] and Section 20(e) of

the Exchange Act [15 U.S.C. § 78t(e)] by aiding and abetting Honig's,

Stetson's, Brauser's, and O'Rourke's violations of Section 17(a)(1) and (3) of

the Securities Act [15 U.S.C. §§ 77q(a)(1) and (3)] and Section 10(b) of the

Exchange Act [15 U.S.C. § 78j(b)] and Rules lOb-5(a) and (c) thereunder [17

C.F.R. §§ 240.1Ob-5(a) and (c)].

26. FGIT violated:

• Section 17(a)(2) of the Securities Act [15 U.S.C. § 77q(a)(2)];

• Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule lOb-5(b)

thereunder [17 C.F.R. § 240.1Ob-5(b)];

• Section 13(d) of the Exchange Act [15 U.S.C. § 78m(d)], and Rule 13d-1(a)

thereunder [17 C.F.R. § 240.13d-1(a)]; and

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• Section 15(b) of the Securities Act [15 U.S.C. § 77o(b)] and Section 20(e) of

the Exchange Act [15 U.S.C. § 78t(e)] by aiding and abetting Honig's,

Stetson's, Brauser's, and O'Rourke's violations of Section 17(a)(1) and (3) of

the Securities Act [15 U.S.C. §§ 77q(a)(1) and (3)] and Section 10(b) of the

Exchange Act [15 U.S.C. § 78j(b)], and Rules lOb-5(a) and (c) thereunder [17

C.F.R. §§ 240.1Ob-5(a) and (c)].

27. Southern Biotech violated:

• Sections 17(a)(1) and (3) of the Securities Act [15 U.S.C. §§ 77q(a)(1) and

~3)~~

• Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rules lOb-5(a)

and (c) thereunder [17 C.F.R. §§ 240.1Ob-5(a) and (c)]; and

• Section 13(d) of the Exchange Act [15 U.S.C. § 78m(d)], and Rule 13d-1(a)

thereunder [17 C.F.R. § 240.13d-1(a)].

28. SCI violated:

• Sections 17(a)(1) and (3) of the Securities Act [15 U.S.C. §§ 77q(a)(1) and

~3)~~

• Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rules lOb-5(a)

and (c) thereunder [17 C.F.R. §§ 240.1Ob-5(a) and (c)]; and

• Section 13(d) of the Exchange Act [15 U.S.C. § 78m(d)], and Rule 13d-1(a)

thereunder [17 C.F.R. § 240.13d-1(a)].

29. The Commission seeks final judgments permanently enjoining Defendants

from violating the federal securities laws, requiring each Defendant to disgorge his or its ill-

gotten gains and to pay prejudgment interest on those amounts; requiring Defendants to pay civil

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monetary penalties; barring Defendants from participating in future penny stock offerings;

barring Defendants Ladd, Maza, and Keller from serving as officers or directors of publicly

traded companies; and seeking any other relief that the Court deems just and appropriate.

30. Unless Defendants are permanently restrained and enjoined, they each will

again engage in the acts, practices, and courses of business set forth in this Complaint, or in acts

and transactions of similar type and object.

JURISDICTION AND VENUE

31. The Commission brings this action pursuant to the authority conferred by

Sections 20(b) and (d) of the Securities Act [15 U.S.C. §§ 77t(b) and (d)], and Sections 21(d) and

(e) of the Exchange Act [15 U.S.C. §§ 78u(d) and (e)].

32. This Court has jurisdiction over this action pursuant to Sections 22(a) and (c)

of the Securities Act [15 U.S.C. §§ 77v(a) and 77v(c)], and Section 27 of the Exchange Act [15

U.S.C. § 78aa]. Defendants, directly or indirectly, singly or in concert, have made use of the

means or instrumentalities of transportation or communication in, interstate commerce, or of the

mails, in connection with the transactions, acts, practices, and courses of business alleged herein.

33. Venue lies in this district pursuant to Sections 22(a) and (c) of the Securities

Act [15 U.S.C. §§ 77v(a) and (c)], and Section 27 of the Exchange Act [15 U.S.C. § 78aa].

Certain of the transactions, acts, practices and courses of business constituting the violations

alleged herein occurred within the Southern District of New York. Among other things, at all

relevant times, Company B's principal place of business was in Harrison, New York, within this

District, and Defendants solicited investments in securities from investors in this District and

sold securities through abroker-dealer located in this District.

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THE DEFENDANTS

Individual Defendants

34. Honig, born in 1971, is a resident of Boca Raton, Florida and currently works

at an office in Boca Raton with Stetson and O'Rourke, and at times, Groussman. Honig owns

GRQ, and co-owns, with Stetson, HSCI, and co-owns, with Brauser and Frost, Southern Biotech.

35. Stetson, born in 1985, is a resident of Fort Lauderdale, Florida and currently

works at an office there with Honig and O'Rourke, and at times, Groussman. Stetson owns SCI,

and co-owns, with Honig, HSCI, of which he is the managing member.

36. O'Rourke, born in 1985, is a resident of Fort Lauderdale, Florida and

currently works at an office in Boca Raton with Honig and Stetson, and at tunes, Groussman.

O'Rourke owns ATG.

37. Brauser, born in 1956, is a resident of Lighthouse Point, Florida and currently

works in an office in Miami in the same building as Frost. Brauser owns Grander.

38. Groussman, born in 1973, is a resident of Miami Beach, Florida and

occasionally works at an office in Boca Raton with Honig, Stetson and O'Rourke. Groussman

owns Melechdavid.

39. Frost, born in 1936, is a resident of Miami Beach, Florida. Frost founded

Opko, and is its CEO. Frost is also the trustee for FGIT. Frost enjoys a reputation as a

successful biotech investor.

40. Maza, born in 1955, is a resident of New York, New York. He was the CEO

of Company A from June 2011 to January 2014. He is a CPA licensed in New York, as well as

an attorney licensed in New York.

41. Keller, born in 1956, is a resident of California. He was Chief Scientific

Officer of Company A from about March 2011 to January 2014, and was a member of its board

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of directors. He currently works as President of Sales and Senior Vice President of Research and

Development at Company A's successor company.

42. Ladd, born in 1959, is a resident of Raleigh, North Carolina. At all relevant

times, he was a resident of New York, New York. He has been the CEO of Company B since

February 10, 2011.

43. Ford, born in 1956, is a resident of Bolinas, California.

Entity Defendants

44. Alpha is a Lichtenstein corporation and hedge fund, managed by an

unregistered investment adviser located in New York, New York.

45. ATG is a Florida corporation that O'Rourke owns and operates with its

principal place of business in Florida. ATG was incorporated in or around 2012.

46. FGIT is a Florida trust that was formed in or around 2002. Frost is FGIT's

Trustee.

47. GRQ is a Florida corporation that Honig owns and operates with its principal

place of business in Florida. GRQ was incorporated in or around 2004.

48. Grander is a Florida corporation that Brauser owns and operates with its

principal place of business in Florida. Grander was incorporated in or around 2010.

49. HSCI is a Delaware corporation that Honig and Stetson co-own and of which

Stetson is the managing member, with its principal place of business in Florida. HSCI was

established in or around 2011.

50. Melechdavid is a Florida corporation that Groussman owns and operates with

its principal place of business in Florida. Melechdavid was incorporated in or around 2006.

51. Opko is a Delaware corporation. Its principal place of business is in Florida.

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Frost is Opko's CEO. Opko was incorporated in or around 2007.

52. Southern Biotech is a Nevada corporation that Honig operates and co-owns

with Brauser and Frost with its principal place of business in Florida. Southern Biotech was

incorporated in or around 2014

53. SCI is a Florida corporation that Stetson owns and operates with its principal

place of business in Florida. SCI was incorporated in or around 2011.

OTHER RELEVANT PERSONS AND ENTITIES

54. Company A is a Delaware corporation headquartered in Georgia. Company A

was controlled by Honig, Frost, and Brauser between March 2011 and December 2013. It was

incorporated in Nevada in 2006. The company filed periodic reports, including Forms 10-K and

10-Q with the Commission. Company A's stock was quoted on OTC Link (formerly known as

the "Pink Sheets"), an electronic interdealer quotation system operated by OTC Markets Group,

Inc. In early 2014, Company A engaged in a reverse merger with a company associated with

Honig and his associates. The successor company is currently quoted on OTC Link. At all

relevant times, Company A's stock was a "penny stock" as that teen is defined in Section

3(a)(51) of the Exchange Act [15 U.S.C. § 78c(a)(51)], and Rule 3a51-1 thereunder [17 C.F.R. §

240.3a51-1].

55. Company B is a Delaware corporation headquartered in Harrison, New York.

Its common stock is registered with the Commission pursuant to Exchange Act Section 12(b) [15

U.S.C. § 781(b)], and it files periodic reports, including Forms 10-K and 10-Q with the

Commission. Company B's common stock was listed on NYSE MKT from 2007 until its

October 19, 2016 delisting. Its stock is currently quoted on OTC Link. At all relevant times,

Company B's stock was a "penny stock" as that term is defined in Section 3(a)(51) of the

Exchange Act [15 U.S.C. § 78c(a)(51)] and Rule 3a51-1 thereunder [17 C.F.R. § 240.3a51-1].

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56. Company C is a Delaware corporation headquartered in San Diego,

California, and was incorporated in 1988. Company C's common stock is registered with the

Commission pursuant to Exchange Act Section 12(b) [15 U.S.C. § 781(b)], and its common stock

is listed on NASDAQ. At all relevant times, Company C's stock was a "penny stock" as that

term is defined in Section 3(a)(51) of the Exchange Act [15 U.S.C. § 78c(a)(51)] and Rule 3a51-

1 thereunder [17 C.F.R. § 240.3a51-1].

FACTS

A. The Company A Scheme

1. Honig, Frost a~zd Brauser Obtaiiz Control of Compa~zy A

57. In the Company A scheme, Honig and Brauser teamed up with Frost, a

frequent collaborator in Honig and Brauser deals involving biotech issuers. As alleged below,

the three men caused the company to issue shares to themselves and their associates through a

series of so-called "private investments in public equities," or "PIPE" financings, drove the price

of the stock higher by secretly paying for a misleading promotional campaign and by virtue of

Honig's and Brauser's manipulative trading, and then unlawfully sold their Company A shares

into the inflated market for proceeds of approximately $9,260,000.

58. In November 2010, Honig, along with his nominees including Stetson and

Groussman, purchased one-third of apublicly-traded shell company. In December 2010,

Brauser and Frost each purchased one-half of the remaining two-thirds of the publicly-traded

shell company. Each of Honig, Stetson, Groussman, Brauser, and Frost, disguised their role in

the acquisition by purchasing the shares from an entity used to make the purchase of the shell

company. Soon after they acquired the shell, Honig, Brauser, and Frost installed a Frost

associate as the sole disclosed director of the company.

59. In late 2010, Honig, Brauser, and Frost approached management of a private

16

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biotech company ("Company A Labs"), including Keller, the Chief Scientific Officer and

Director, and Company A Labs then-CEO ("Company A Labs CEO") with a proposal for taking

the company public. Honig, Brauser, and Frost proposed a reverse merger, by which Company

A Labs, aprivately-held California company then in the business of manufacturing over-the-

counter pharmaceutical products, would be merged into Honig's, Brauser's, and Frost's publicly-

traded shell. At the time, Company A Labs and Keller were working on developing a

formulation using a patented technology called "Qusomes" that Company A Labs hoped to use

in large-scale drug markets, and the inanageinent of Company A Labs saw the deal as creating

financing possibilities to fund the company's research.

60. Indeed, Honig, Brauser, and Frost told Keller and Company A Labs CEO that

the public company deal would include raising $8 to $15 million dollars to support research and

development ("R&D") into Qusomes. And they further persuaded Company A Labs CEO to go

along with the merger by promising hiin 6,650,000 shares of the newly created public company.

61. The proposed merger hit a snag, however, in March 2011. Pursuant to a $3

million credit line Company A Labs had with a San Francisco bank, the bank had authority to

approve all major transactions, and, in March 2011, it declined to approve the proposed merger.

The merger nonetheless closed in June 2011, and the bank thereafter sent a default notice. On

September 8, 2011, Maza, who had been installed as the CFO and director of Company A Labs

by Honig and Brauser, completed the payoff of the credit line thereby removing the obstacle to

the merger, but saddling Company A Labs with short-term, high-interest rate notes that included

a conversion option into equity of the company.

62. In connection with the reverse merger, Honig, Brauser, and Frost arranged the

sale of certain unprofitable Frost assets to the public company in exchange for 8,345,310 shares

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and the obligation of the company to file a registration statement for these shares, providing

further value to Frost.

63. After the closing of the reverse merger of Company A Labs into the shell

company in June 2011, the surviving public company became Company A. Honig, Brauser,

Frost, Groussman, and Stetson controlled the vast majority of the Company A's stock and were

affiliates of Company A.

64. After the merger, Company A listed its corporate address at 4400 Biscayne

Boulevard in Miami, the same business address then shared by Honig, Brauser and Frost.

65. In addition to controlling the vast majority of Company A's outstanding shares,

Honig, Brauser, and Frost exercised control over the management of Company A. Before the

deal closed, Honig and Brauser, acting with the knowledge and consent of Frost, Stetson and

Groussman, had installed their associate, Maza, as the CFO and a director of Company A Labs.

After the merger, Maza became the CEO of Company A. Thereafter, Maza sought approval

from Honig and. Brauser for every business decision. For example, at the direction of Honig and

Brauser, Maza agreed to divert funds from Company A to pay rent for the office of an unrelated

entity co-owned. by Honig and Brauser.

66. In their capacity as the three board members of Company A, Keller, Maza, and

the Frost associate concealed Honig's and Brauser's control of Company A by signing off on

public filings that failed to disclose the involvement of Honig, Brauser, Stetson and Groussman,

omissions that made those filings materially misleading. These filings included Company A's

Form 10-K filed on April 16, 2012.

67. At the time they signed these filings, Keller and Maza understood that Honig

and Brauser, with Frost's knowledge and consent, controlled Company A's management, and not

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Maza. As Keller explained in a February 12, 2012 email to a Company A colleague, "[t]he real

power is with Barry Honig and Mike Brauser. Elliot [Maza] is just a mouth piece." Following

the merger, Company A's filings nonetheless identified only Frost, but not Honig or Brauser, as

a control person.

68. Honig, Brauser, and Frost failed to keep their promises to invest money in

Company A for R&D. Instead, in a series of PIPE financings, which included warrants for

additional shares, done between February 24 and March 12, 2012, they limited their investment

to keep the business operating at a minimal level and to fund Maza's and Keller's generous

compensation, forcing Company A to abandon its R&D efforts entirely bymid-2012. Kelley's

compensation snore than doubled once he began working with Honig and Honig's associates,

whereas Maza's annual compensation ranged from $300,000 to $600,000.

69. Honig, Brauser, and Frost also used the financings to amass more, ever-

cheaper Company A shares, and although the financings did nothing to enhance Company A's

continued growth, Maza and Keller went along with them because both were promised, and

ultimately awarded, substantial salaries as well as millions of Company A shares, by Company

A's real control persons, which included Honig, Brauser, Frost, Stetson and Groussman.

70. By April 1, 2013, and pursuant to an agreement to acquire, hold or sell their

shares in concert, Honig, Frost, Brauser, Maza, Keller, and the Frost associate had amassed

44,818,312 shares, or almost 71 % of the Company A shares outstanding, with Honig alone

holding 5,542,654 shares, or 8.8% of the company's outstanding shares. Yet, even though

Company A filed an amendment to its Form 10-K annual report for the 2012 fiscal year on

September 13, 2013, signed by Maza, Keller, and the third board member, for the specific

purpose of updating the beneficial ownership table, the annual report failed to disclose the

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existence of the Honig-allied group, which beneficially owned nearly three-quarters of Company

A's outstanding shares.

71. On July 16, 2012, Company A Labs CEO —who had been ousted from

Company A by Honig and Brauser with Keller's assistance —sued Company A, Honig, Brauser,

Maza, and Frost. Brauser, who was not an officer or director of Company A, took the lead in

negotiating a settlement on behalf of Company A, frequently updating Honig and Frost on his

negotiations. In September 2013, Brauser and Honig came to terms with Company A Labs CEO,

agreeing to pay hiin $2 million in return for his relinquishing his claim to the Company A shares

he had been promised in the merger, and that he had never received. Maza then ratified the

settlement terms~on September 5, 2013.

2. The Company A Pump and Dump

72. In preparation for the Company A pump and dump, during August and

September, 2013, Stetson, at Honig's direction, deposited in a brokerage account almost 4

million Company A shares that had been issued to Honig. Stetson worked closely with Honig,

Brauser, and Frost and knew how much Company A stock they controlled, and that Honig and

Brauser were directing Company A's inanageinent and policies. In connection with the deposit

of these shares, Stetson submitted Honig's signed answers to the broker's questionnaire, falsely

denying any relationship between Honig and Company A or its affiliates. At the time that

Stetson made that submission, and Honig signed it, each knew, or was reckless in not knowing,

that Honig was an affiliate of Company A because Company A was under Honig's control.

73. On September 4, 2013, Stetson facilitated the issuance of false attorney opinion

letters to Company A's transfer agent in order to remove restrictive legends from Honig's share

certificates. These opinion letters contained the material misrepresentation that Honig was not

20

Case 1:18-cv-08175   Document 1   Filed 09/07/18   Page 20 of 53an affiliate of Company A, a representation that Stetson knew, or was reckless in not knowing,

was false, given what he knew about Honig's control over Company A's management and

polices.

74. As part of the process for depositing Honig's shares with a broker, and in

preparation. for the pump and dump, CEO Maza was also required to issue a letter to confirm the

authenticity of the stock certificates. In a letter to the broker-dealer, dated September 10, 2013,

Maza wrote "[w]e further acknowledge and agree that there is no other agreement or

understanding between Barry Honig and [Company A] that would preclude Barry Honig from

selling or otherwise disposing of shares represented above." Maza knew, or was reckless in not

knowing, that this statement was false because Honig was an affiliate of Company A, and that, as

an affiliate, Honig's ability to sell his Company A shares would be subject, under the federal

securities laws, to volume limitations.

75. Once the restrictions were lifted from Honig's shares and. the shares were

deposited into a brokerage account, Honig was ready to sell them. In September 2013, Honig

directed his associate, O'Rourke, to reach out to Ford, a seasoned stock promoter who used his

platform on the Seeking Alpha website to share his purportedly independent investment analysis

of selected companies. O'Rourke contacted Ford and proposed that Ford write an article on the

Seeking Alpha website promoting Company A in exchange for below-market price Company A

shares. At that time, Honig, Frost, Brauser, Stetson, Groussman, O'Rourke, Keller, Maza, and

the Frost associate board member owned about 71 % of the outstanding Company A shares, and

the market for Company A was virtually nonexistent (with zero volume on September 20, 2013).

O'Rourke instructed Ford to write a favorable article about Company A emphasizing Frost's

involvement (because Frost was known as a billionaire and successful biotech investor) and the

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supposed rosy prospects of Company A's R&D.

76. On September 23, 2013, Honig and some associates began trading Company A

shares to create the appearance of market activity and interest in Company A in advance of the

planned Ford article. That day, the trading volume of Company A shares soared to 302,000 from

zero volume the previous day.

77. The September 23rd trading also gave Honig a way to surreptitiously pay Ford

for his upcoming favorable article on Company A. O'Rourke called Ford and told him to put in

buy orders for Company A stock at $0.40 in order to ensure his order was executed against the

corresponding sell order placed by Honig. Honig then sold 180,000 Company A shares to Ford at

$0.40 in a coordinated trade, a price well below the price at which these shares otherwise traded

during that day.

78. O'Rourke joined the trading at the end of the trading day on September 23rd to

"mark the close," i.e., to ensure that the last price of the day would be higher, giving the false

impression that Company A's share price was on an upward trajectory. Specifically, at 3:58 pm

that day, O'Rourke, through his entity ATG, placed a bid to buy Company A shares at $0.68, a

significantly higher price than the prior buy order at $0.55, which had been entered at about 3:06

pm. Another Honig associate, who had purchased shares from Honig earlier in the day, placed a

corresponding sell order to complete the transaction at the inflated price.

79. In further preparation for the publication of the Ford article touting Company

A, and to enhance the false picture of an active market for the stock, near the end of the trading

day on September 26th, Honig and his associates engaged in a series of coordinated trades. For

example, the Barry &Renee Honig Charitable Foundation, controlled by Honig, sold Company

A shares to a Honig associate at $0.68, and two minutes later Groussman's entity Melechdavid

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executed a transaction against ATG, O'Rourke's entity, at $0.68.

80. Less than half an hour before market close on September 26, 2013, as directed

by O'Rourke and Honig, and after review by Keller, Ford published a materially misleading

promotional article on Seeking Alpha, titled "Opko and Its Billionaire CEO Invested in Company

A." Ford presented a bullish outlook for Company A and concluded that "Company A should be

trading for more than twice today's valuation." In the article, which included a question and

answer interview of Keller, Ford quoted Keller touting the benefits of Company A's Qusomes

technology. Keller misleadingly stated that Company A had a formulation ready for testing to be

brought to the billion-dollar injectable drug market. Yet, as Keller knew, as of summer 2012, all

R&D efforts had been shut down without the successful formulation of an injectable drug and

Company A had ceased all efforts to develop this technology in mid-2012.

81. Ford's article failed to disclose that he had been compensated by Honig for

writing the article, through Honig's sale to hiin ofbelow-market Company A shares on

September 23, a material omission. Instead, Ford included a disclaimer that merely disclosed "I

am long [Company A]. I wrote this article myself, and it expresses my own opinions. I am not

receivin~pensation for it (other than from Seeking Alpha. I have no business relationship

with any company whose stock is mentioned in this article." (Emphasis added.)

82. The market reacted strongly to the Company A promotion: the trading volume

of Company A stock rose from approximately 1,100 shares on September 25, 2013 to over 4.5

million shares on September 27, 2013 and to more than 6 million shares on October 2, 2013.

The share price increased from an average of about $0.48 during August 2013 to an intraday

price of $0.97 on October 17, 2013.

83. Between the start of the promotion following the publication of Ford's article

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on September 26, 2013 and December 31, 2013, Honig and his associates sold shares into the

inflated market for proceeds of approximately $9,260,000:

Com any A Pump and Dum Proceeds
Defendants Trade Dates

(2013)
Net Quantity
Sold

Proceeds

Honi 9/23 — 12/16 (5,892,689) $3,416,455.17
Brauser and Grander 9/27 — 12/23 (2,128,316) $1,137,775.46
Frost 10/1 — 10/4 (1,987,991) $1,085,321.74
Groussman and
1Vlelechdavid

9/26 — 10/14 (1,229,166) $677,272.37

Stetson and SCI 9/27 — 12/18 (500,000) $279,859.68
O'Rourke and ATG 9/23 — 12/27 (250,000) $148,443.68
Al ha Capital 10/3 — 11/27 (3,772,200) $2,513,724.08
Total (15,760,362) $9,258,852.1.8

84. No registration statement was then in effect for any of Honig's, Brauser's,

Frost's or Groussman's sales in the September through December 2013 period. No exemption

from registration was available to any of them, or their entities. Moreover, since Company A did

not trade on a national securities exchange, as affiliates of Company A, these Defendants could

only lawfully sell 1% of the company's total shares outstanding in any three-month period. As

of September 2013, Company A had approximately 63 million shares outstanding, and as of

November 15, 2013, it had approximately 75 million shares outstanding. Because Honig,

Brauser, Frost, and Groussman, and their respective entities, were under common control with

Company A, each was an affiliate of Company A, and each sold shares in excess of the

applicable volume limitations.

3. Alpha's Company A Sales

85. Alpha frequently co-invested with Honig, and participated in several rounds of

the Company A PIPE financings, resulting in Company A's issuance of millions of shares to

Alpha at steeply discounted prices in January 2012, Apri12013 and September 2013.

86. On September 5, 2013, when Honig and Brauser reached their settlement with

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Company A's CEO, by which he disavowed his ownership of the 6,650,000 shares to which he

had been entitled, Alpha purchased 1.5 million of those shares at $0.15 per share, with the

intention of selling the shares into the inflated market created by the Honig-orchestrated

promotion. Company A issued the shares to Alpha on September 23, 2013, days before the Ford

article appeared on Seeking Alpha. On October 29, 2013, Alpha obtained an attorney opinion

letter that it supplied to Company A's transfer agent so that the transfer agent would remove the

restrictive legend from the share certificate. The attorney opinion letter — as Alpha knew or was

reckless in not knowing —falsely represented that Alpha had held the shares for at least 6 months

and that the shares could be sold in accordance with the Securities Act Rule 144 safe harbor, as

exempt from the registration provisions.

87. Between October 3, 2013 and November 18, 2013, Alpha, in lockstep with

Honig, Brauser, Frost, Groussman, O'Rourke, and Stetson (and their respective entities), sold 3.7

million Company A shares for proceeds of $2,513,724, including virtually all of the shares Alpha

had obtained in September 2013.

B. The Company B Scheme

1. Honig and Associates SecNetly Obtain Cof~zpany B Shares

88. During 2015 and 2016, Honig and his associates used Company B, a publicly

traded shell, as another vehicle for apump-and-dump scheme. Honig and his partners used

many of the same tactics they had employed in the Company A scheme: they bought cheap

shares, intending to exercise control over the management and polices of the company; exercised

that control; orchestrated a misleading promotion of the company that drove up the stock price

and the trading volume of the company's shares; and dumped their shares for a profit in the

inflated market. Despite their control over various actions taken by Company B, and their

agreement to buy, hold and/or sell their shares in concert, Honig and his associates —this time

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including Groussman, Brauser, Stetson and O'Rourke —took numerous steps to conceal their

involvement, and to perpetuate the false appearance that the company was actually being

controlled by its CEO.

89. In 2015, Honig and his associates began planning the pump-and-dump of

Company B's shares. Honig set the scheme in motion on September 26, 2015 when he informed

Stetson that "[w]e need to put together a term sheet for Company B," and outlined proposed

terms of the arrangement. Honig directed Stetson to send the proposal to Ladd, Company B's

CEO. The deal contemplated the issuance of 2.8 million Company B shares, along with warrants

to acquire an additional 5.6 million shares, subject to a 4.99% conversion blocker. This deal

structure allowed the investors repeatedly to convert and sell their shares while appearing

individually to stay below the 5%threshold ownership at which Exchange Act Section 13(d)

required public disclosure of holdings. By ostensibly staying below the 5%ownership threshold,

and evading the public reporting requirements, Honig and his associates increased the likelihood

that they could disguise their scheme to pump up the price of Company B's shares in anticipation

of a profitable sell-off to unsuspecting investors.

90. Ladd was fully aware of Honig and his associates' combined interest in, and

control over, the company, but failed to disclose it in Company B's public filings. On October 1,

2015, Ladd einailed Honig that "NYSE MKT wants to know the buyers. $175,000 x 4 investors

will be each at 4.9%. . . ." Honig replied that same day, copying Brauser and Stetson, that he

would "get back to you with names shortly for now use Barry Honig Mike Brauser OBAN [an

LLC created by Stetson]." On October 5, 2015, Stetson provided Company B with the investors

who would participate in the financing, which included GRQ (Honig), Melechdavid

(Groussman), Grander (Brauser), ATG (O'Rourke) and SCI (Stetson).

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91. The Honig-led financing ultimately provided $700,000 to Company B (the

"October 2015 Company B Financing"). On October 8, 2015, Company B filed a Fonn 8-K

disclosing that the company had "entered into separate subscription agreements . . .with

accredited investors . . .relating to the issuance and sale of $700,000 of units . . ." In keeping

with Honig's desire to conceal the large ownership stake of his team, Ladd did not disclose the

investors' names in the Form 8-K.

2. The Compaizy B Punzp and Dump in February 2016

92. Having coordinated the accumulation of stock with Groussman, Brauser,

Stetson and O'Rourke, Honig, with his partners' knowledge and consent, then secretly paid for a

promotion that included materially misleading information and was supported by his own

manipulative trading activity.

93. On or around January 21, 2016, by which tune Honig, Groussman, Brauser,

Stetson and O'Rourke had acquired at least 16.3% of Company B's outstanding stock, Honig

directed Ladd to wire $125,000 to a well-known stock promoter as an up-front payment for the

promotion of Company B. Shortly after the payment for the stock promotion, on February 3,

2016, an article was published online touting Company B's positive prospects in social and real

money gaming sites and intellectual property relating to slot machines. The article did not

disclose that the author had been paid by Company B — at Honig's direction — to write the article.

After the article was published on February 3, 2016, there was a 7000% increase from the

previous day's trading volume, and an intraday price increase of over 60%. Honig, Ladd,

Stetson, and O'Rourke sold over 430,000 shares into this inflated market for proceeds of

approximately $198,800.

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Com an B Pum and Dum Proceeds, Following Februar 2016 Promotion
Defendants Trade Dates (2016) Net Quantity Sold Proceeds
Honig and GRQ 2/3 — 4/6 (231,050) $123,154.87
Stetson 2/3 — 2/11 (40,000) $20,483.33
O'Rourke and ATG 2/3 — 2/9 (64,366) $15,960.72
Ladd 2/3 — 5/3 (96,072) $39,204.12
Total (431,488) $198,803.04

3. The Company B Pump and Duf~tp in May 2016

94. Honig soon identified a potential acquisition target for Company B that would

give Honig and his associates another way to profit from their interest in Company B. The

proposed deal involved awell-known cybersecurity innovator who had created a popular

antivirus software bearing his name ("the Cybersecurity Innovator"). O'Rourke took the lead at

Honig's direction (and with the knowledge and consent of Groussman, Brauser and Stetson) in

arranging a deal between Company B and the Cybersecurity Innovator. On March 29, 2016,

O'Rourke sent the Cybersecurity Innovator a term sheet for the asset purchase of Cybersecurity

Innovator's company, "CI Company," by an "NYSE listed company." The CI Company

indicated interest on Apri13, 2016. O'Rourke wrote to Honig on Apri13, 2016 and asked Honig

if he would "still want to pursue [Cybersecurity Innovator] deal." After Honig replied to

O'Rourke that same day "Yea!", O'Rourke introduced Ladd to the Cybersecurity Innovator on

Apri14, 2016, to begin negotiating a transaction between Company B and the Cybersecurity

Innovator's various business interests.

95. Subsequent correspondence between Ladd and O'Rourke and between

O'Rourke and Honig, reflect the ongoing and significant role Honig and O'Rourke played in

orchestrating the deal. Company B and the Cybersecurity Innovator agreed to terms on May 8,

2016.

96. On May 9, 2016, at 8:30 a.m., Company B issued a press release announcing

Case 1:18-cv-08175   Document 1   Filed 09/07/18   Page 28 of 53



its merger with CI Company. In the release, Ladd misleadingly described the Cybersecurity

Innovator's prior financial success. He falsely claimed that the Cybersecurity Innovator had

"sold his anti-virus company to Intel for $7.6 billion," suggesting that Company B might achieve

similar success. Yet, as Ladd knew or was reckless in not knowing, the sale of the Cybersecurity

Innovator's namesake company to Intel at that price had occurred over a decade after the

Cybersecurity Innovator's departure from that company.

97. Knowing that Ladd's misleading announcement of the deal would be released

later that morning, on May 9, 2016, Honig traded in Company B stock to create the misleading

appearance of market liquidity. In pre-market trading that morning, Honig bought and sold small

quantities of Company B stock dozens of tunes. Joining the effort to paint a false picture of

legitimate market interest in the stock, Brauser, as well as Groussinan, and his entity,

Melechdavid, engaged in coordinated trades in Company B stock with Honig in pre-market

trading that morning.

98. That same day, StockBeast.com, a well-known Internet stock promotion

website, published an article by an unnamed author entitled "[Company B] Beastmode engaged —

[Cybersecurity Innovator] driving the Bus." The StockBeast.com article touted Company B and

highlighted the Cybersecurity Innovator's involvement, repeating Ladd's materially false claim

that the Cybersecurity Innovator had "sold his startup company to Intel for $7.6BB," and

proclaiming: "This is big big big!"

99. This promotion and Honig's, Brauser's and Groussman's manipulative trading

on May 9 were effective in driving up both volume and price: on May 6, 2016 (the last day of

trading prior to the promotion), Company B had trading volume of 71,005 shares and a closing

price of $0.36. On May 9, 2016, the stock closed at $0.49 (representing an increase of 34

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percent over the prior day's close) with trading volume of snore than 10 million shares. The

trading volume for Company B stock peaked at 109,384,614 on May 17, 2016 with a closing

price of $4.15.

100. In the days immediately following the announcement of the CI Company

acquisition, Honig, Brauser, Stetson, Groussman and O'Rourke, pursuant to their agreement to

buy, hold and/or sell their shares in concert, sold over 9.3 million Company B shares, resulting in

total proceeds of over $9.4 million:

Com any B Pump and Dump Proceeds, Following Ma 2016 Promotion
Defendants Trade Dates

(2016)
Net Quantity Sold Proceeds

Honig and GRQ 5/9 — 5/20 (3,783,001) $2,393,915.52
Brauser and Grander 5/9 — 5/18 (2,137,668) $3,839,295.64
Groussman and
Melechdavid

5/9 — 5/11 (1,415,870) $999,873.56

Stetson and SCI 5/9 — 5/12 (750,000) $660,798.20
O'Rourke and ATG 5/9 — 5/16 (750,000) $990,661.97
Ladd 5/9 — 5/31 (471,000) $516,554.08
Total (9,307,539) $9,401,098.97

4. False Statements by Ho~Zig, Frost, Brauser, Stetson, Groussf~za~z,
O'Rourke, and Ladd in Beneficial Ownership and Company B Filings

101. Although they were acting in concert, and pursuant to an agreement to do so,

Honig, Frost, Brauser, Stetson, Groussman and O'Rourke knowingly or recklessly concealed

their concerted efforts from the investing public. Ladd, with full knowledge of both the Honig

group's ownership and their direction of the management and policies of Company B, also kept

their control a secret, signing Company B public filings that did not disclose the full extent of

their ownership or control. After the October 2015 Company B Financing closed, Honig,

Groussinan, Brauser, Stetson and O'Rourke as a group collectively owned at least 2.6 million

shares, or over 16% of the shares outstanding after the issuance, and their obligation to file a

Schedule 13D under Exchange Act Section 13(d) arose as of October 8, 2015. Moreover, they

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each had warrants to obtain a total of an additiona14.6 million Company B shares, which, if they

were all converted, would have resulted in Honig, Groussman, Brauser, Stetson and O'Rourke

controlling at least 42% of the total coininon shares outstanding at that tune.

102. Honig, Groussman, Brauser, Stetson and O'Rourke exercised control over

Ladd and the management and policies of Company B. For example, on October 1, 2015, Ladd

asked for and received Honig's direction with respect to how to disclose Honig's group's stock

acquisitions to the NYSE MKT exchange. O'Rourke, at Honig's direction, negotiated on

Company B's behalf the terms on which the Cybersecurity Innovator would sell CI Company to

Company B. Indeed, in emails after the CI Company acquisition, Honig freely accepted credit

for his role in the transaction. On May 12, 2016, for example, Honig received an email from an

investment firm congratulating him on the recent transaction: "You're invovlved [sic] with

[Company B]? Impressive!" Honig responded that he was the "[l]argest shareholder, fund and

relationship with [the Cybersecurity Innovator]." In early August 2016, Honig also admitted his

undisclosed role at Company B in a chat conversation with Stetson: "its great in [Company B]

because we are behind the scenes."

103. Because they acted in concert for the purpose of acquiring, holding and

disposing of Company B shares, each of Honig, Groussman, Brauser, Stetson and O'Rourke was

a member of a group and considered a single "person" under Exchange Act Section 13(d)(3). As

group members, each individual was required to satisfy the group's reporting obligation by

making a Schedule 13D filing disclosing that each was a member of the group and disclosing the

number of shares each of them beneficially owned. However, none of Honig, Groussman,

Brauser, Stetson or O'Rourke ever made a Schedule 13D filing disclosing their respective

ownership or membership in a group, acting intentionally to conceal from the market the size of

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their group's position and their coordination and thereby to deceive investors.

104. Instead, on October 19, 2015, Honig filed a Schedule 13G, claiming only his

own 6.59% beneficial ownership and falsely stating that the securities "are not held for the

purpose of or with the effect of changing or influencing the control of the issuer" — a

representation he knew, or was reckless in not knowing, to be false. Indeed, because Honig and

his associates exercised control over Company B's management and policies — as Honig

candidly acknowledged in emails — he was disqualified from making a 13G filing. In February

2016, Honig filed an amended Schedule 13G disclosing an ownership percentage of 9.1%.

Brauser filed a Schedule 13G on May 4, 2016, in which he claimed 7.4 %beneficial ownership

via his entity Grander. In each of these filings, Honig and Brauser also falsely claimed that they

were passive investors without any intention to influence or change control of the company and

omitted the fact that each was a member of a group.

105. Similarly, in Company B's 2015 Form 10-K filed on April 11, 2016, only

Honig was disclosed as a beneficial owner, holding 8.6%. Notwithstanding that Ladd knew that

Honig, Groussman, Brauser, Stetson and O'Rourke were working together, he signed the 2015

Form 10-K failing to disclose their group beneficial ownership. Ladd also signed a materially

misleading S-1/A registration statement filed on January 13, 2016 for the 8,400,000 Company B

shares issued in the October 2015 Company B Financing, failing to disclose the group beneficial

ownership of GRQ, Grander, Melechdavid, ATG and SCI.

C. The Company C Scheme

I. Honig and Stetson Obtain Coiatrol of Company C

106. In early 2014, Honig identified apublicly-traded shell company that was

unencumbered by debt or pre-existing convertible debt, and sought an appropriate private

company for purposes of a reverse merger and pump-and-dump scheme.

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107. At or about the same tune, the CEO of Company C ("Company C's CEO") was

introduced to "Entity H," a frequent co-investor alongside Honig and Brauser. At the time,

Company C, a private company developing cancer therapies and diagnostic products, was

looking for funding for its research and development efforts, and Entity H suggested to Company

C's CEO that he turn Company C into a public company. On July 8, 2014, Company C executed

a reverse merger of Company C into the shell company Honig had identified. Company C's

CEO understood that the two lead investors in the transaction were Entity H and HSCI, both of

which had signed the deal documents. Stetson had described HSCI to Company C's CEO as his

own investment vehicle. In fact, while Stetson was the sole managing ineinber of HSCI, Honig

actually owned at least 94% of HSCI, a fact that Stetson did not disclose to Company C's CEO

or the market.

108. In an initial $3 million capital raise in February 2014, in connection with the

contemplated merger, HSCI invested $1 million and Entity H invested $1.7 million in return for

a substantial position in the shell. As a result, the stake of Entity H and HSCI (including

conversion of all warrants) amounted to about 67% of the authorized shares of the newly public

Company C. The terms of the merger included granting a "Consent Right" to Entity H and its

affiliates, by which Entity H could block or approve many kinds of Company C transactions,

including issuing additional shares, any change of control and other basic corporate actions.

109. In March and Apri12015, Honig orchestrated two private placement financings

for Company C: Series D and Series E. Honig determined the amount, source and structure of,

and participants in, these financings. For example, when deciding whether a potential investor

could take part in the March 2015 financing round, Company C's CEO explicitly deferred to

Honig, writing in an email to Honig on March 19, 2015, "[h]e might be another party you might

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want to allow to invest along with the current group. Viewed this as your choice not mine. That

is why I asked him to call you."

110. The Series D financing closed in late March 2015 and included a buyout of

Entity H's notes, including the Consent Right, at a favorable purchase price. The investors who

purchased the notes included various entities owned and controlled by Honig, Stetson,

O'Rourke, Brauser, Frost, and Groussman: HSCI, Southern Biotech, GR.Q, ATG, Grander, and

Melechdavid.

111. The Series E financing, which closed Apri16, 2015, included warrants, and

raised $12 million for Company C on terms highly favorable to Honig and his chosen investors,

including Southern Biotech, and Frost's FGIT and Opko.

2. The Company C Pump aizd Duf~ip iiz April 201 S

112. One of the goals of the private placement financings, as Honig, Stetson,

O'Rourke, Brauser, Frost, and Groussman knew, was to generate market interest in Company C

stock in preparation for a planned stock promotion. On April 3, 2015, O'Rourke, acting at

Honig's direction, drafted a press release (with input from Company C's CEO, Honig and

Brauser) announcing the $12 million private placement in which Frost's entities had participated.

Honig then directed O'Rourke to write a promotional article, which O'Rourke published under

the pseudonym "Wall Street Advisors" on Seeking Alpha on April 8, 2015 at 11:13 a.in. The

article, titled "Opko Spots Another Overlooked Opportunity in Company C Therapeutics,"

highlighted Opko's and Frost's investment in Company L. Despite his involvement in

facilitating the Company C financing and his extensive business relationships with Honig,

Stetson, Brauser, and Frost, in his article, O'Rourke knowingly and falsely claimed that "[t]he

author has no business relationship with [Company C]." He also knowingly and falsely claimed

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that he was "not receiving compensation for [writing the article]."

113. Anticipating the release of O'Rourke's Seeking Alpha article, ATG,

Melechdavid, and O'Rourke engaged in early trading of Company C shares on April 8, 2015

with the intention of creating a false appearance of market interest in the stock. That trading

included at least one matched trade, with Melechdavid submitting the buy order and ATG

submitting the sell order for the same price at 9:38 a.in. The share price of Company C opened

that day at $3.14 and reached $3.73 in the minutes before the promotion was released.

114. The promotion was successful. The trading volume of Company C shares rose

almost 7500% from 8,833 shares on Apri12, 2015 to 667,454 shares on Apri16, 2015, following

the announcement of the Series E private placement. The volume increased to 858,709 on April

9, 2015, the day after O'Rourke's article was published. Company C's share price went from a

closing price of $1.91 on April 1, 2015 to a closing price of $4.30 on Apri19, 2015. The

Defendants listed below, acting pursuant to their agreement to buy, hold or sell their Company C

shares in concert, sold shares into the market from April 6 to June 30, 2015 for total proceeds of

aver $5.5 million, as detailed below:

Company C Pum and Dump Proceeds, Following Apri12015 Promotion
Defendants Trade Dates (2015) Net Quantity Sold Proceeds
Brauser 4/13 — 6/30 (576,400) $1,600,826.76
Groussman and Melechdavid 4/6 — 6/23 (99,616) $342,984.59
Stetson and HSCI 4/6 — 6/30 (1,080,379) $3,607,248.91
O'Rourke and ATG 4/8 — 6/30 (30,064) $69,744.51
Total (1,786,459) $5,620,804.77

3. The Company C PunZp and Dump in June/July 2015

115. In June 2015, when the market for Company C shares had cooled, O'Rourke

recruited Ford to publish another Company C tout on Ford's blog. On July 1, 2015, Ford

published an article titled "[Company C]: Near-Term Catalysts Could Push Shares from $2 to

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over $5." The article contained materially false statements, including that a licensing deal was

imminent, when it was not, and that there were near-teen therapy development events that could

take the share price to $5, when. in fact clinical trials were in early stages. Although, as before,

Honig compensated Ford for writing the blog post, Ford did not disclose that he had been paid.

116. Ford's article had the desired impact on the market: Company C trading

volume increased from 227,182 shares on June 30, 2015 to 798,213 shares on July 2, 2015.

Likewise Company C's share price went from a closing price of $2.32 on June 30, 2015 to $2.71

on July 2, 2015. Pursuant to their agreement to buy, hold or dispose of their shares in concert,

the Defendants listed below sold shares into the market from July 1 to December 31, 2015 for

proceeds of over $2.7 million, as detailed below.

Com any C Pum and Dum Proceeds, Following June 2015 Promotion
Defendants Trade Dates (2015) Net Quantity Sold Proceeds
Brauser 7/1 — 10/7 (363,050) $749,025.45
Groussman and Melechdavid 7/15 — 12/18 (212,034) $243,250.96
Stetson and HSCI 7/1 — 12/7 (682,539) $1,525,588.49
O'Rourke and ATG 7/1 — 12/31 (179,690) $235,253.20
Total (1,437,313) $2,753,118.10

117. Honig and Stetson continued to invest in Company C and directed critical

business choices for Company C. For example, on more than one occasion, Honig or Stetson

directed Company C's CEO to name Honig's choice to Company C's board. On January 15,

2015, Honig and Stetson decided that Company C needed to employ different attorneys and

shortly thereafter directed Company C's CEO which counsel to retain in connection with

Company C's corporate filings. And on August 15, 2016, at Honig's and Stetson's direction, as

a condition to HSCI providing additional. financing to Company C, HSCI and Company C's

CEO executed a letter agreement requiring Company C to hire the public relations firm that

Honig and Stetson had selected.

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4. False Beneficial Ow~zership Repofts by Ho~zig and Associates

118. Given the agreement among Honig, Brauser, Groussman, Frost, Stetson, and

O'Rourke to buy, hold and/or dispose of their Company C shares in concert; the group's

direction of Company C management and policies; and their combined share ownership, all of

the members of the group were required to make Schedule 13D filings that they did not make.

They did not make the appropriate filings so that the investing public would not discover their

control over Company C, and to obscure from investors their planned pump-and-dump scheme.

119. Stetson and HSCI were obligated to make a Schedule 13D filing as of July

2014, after Company C became public and they acquired beneficial ownership of more than 5%

of Company C shares. Similarly, as of the closing of the private placement financings in April

2015, Groussman (Melechdavid) and O'Rourke (ATG) were each obligated to make a Schedule

13D filing, disclosing their own respective holdings and that each was a member of the group

because they were acting with one another and with Stetson, Honig, and Frost for the purpose of

acquiring, holding or disposing of Company C shares, and collectively owned greater than 5% of

Company C's outstanding shares.

120. Even though Frost and FGIT acquired the Company C shares with an intention

to control management, Frost and FGIT made a Schedule 13G filing on April 10, 2015

incorrectly indicating that they were passive investors. Moreover, the Schedule 13G stated that

Frost and FGIT had a 6.86% ownership percentage, and did not disclose they were working with

Honig, Stetson, O'Rourke, Brauser, and Groussman, and that they, with the other members of

their group, sought to direct and control management. Nor did Frost file a Schedule 13D for

Opko or Southern Biotech, in which those companies should have disclosed both their own

holdings and that they, too, were each a member of the group. Instead, Frost improperly made

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four Schedule 13G/A filings on April 10, 2015, February 8, 2016, February 3, 2017, and January

18, 2018, ignoring the fact that he was ineligible to file a Schedule 13G because he was not a

passive investor.

121. Other Defendants who invested in Company C also improperly made Schedule

13G filings, notwithstanding that these Defendants were not passive investors, and also failed to

disclose their membership in the group, in violation of an express disclosure requirement. For

example, Honig filed a Schedule 13G on February 17, 2017 disclosing only his 6.22% ownership

through GRQ; Stetson filed a Schedule 13G on September 19, 2017, disclosing only his 5.64%

ownership through HSCI, Brauser filed a Schedule 13G on February 2, 2017, disclosing only his

5.44% ownership through Grander. Each of these Defendants should have made Schedule 13D

filings because they were not passive investors, and each should have disclosed the existence of a

group. Additionally, a Schedule 13D filed by Stetson on February 12, 2018, a Schedule 13D

filed by Honig on February 13, 2018, and a Schedule 13D/A filed by Honig on February 16,

2018 also failed to disclose the existence of a group.

FIRST CLAIM FOR RELIEF
Violations of Section 10(b) of the Exchange Act and Rule lOb-5

(Against Honig, Stetson, Brauser, O'Rourke, GRQ, Grander, HSCI, and Maza)

122. The Commission realleges and incorporates by reference herein each and every

allegation contained in paragraphs 1 through 121 of this Complaint.

123. By engaging in the acts and conduct described in this Complaint, Defendants

Honig, Stetson, Brauser, O'Rourke, GRQ, Grander, HSCI, and Maza, with scienter, directly or

indirectly, singly or in concert, by use of the means or instruments of transportation or

communication in interstate commerce, or of the mails, or of the facilities of a national securities

exchange, in connection with the purchase or sale of Company A, Company Band/or Company

Case 1:18-cv-08175   Document 1   Filed 09/07/18   Page 38 of 53



C securities, have: (a) employed devices, schemes, or artifices to defraud;

(b) made untrue statements of material facts or omitted to state material facts necessary in order

to make the statements made, in light of the circumstances under which they were made, not

misleading; and/or (c) engaged in acts, practices, or courses of business which operated or would

operate as a fraud or deceit upon any person.

124. By reason of the foregoing, Honig, Stetson, Brauser, O'Rourke, GRQ,

Grander, HSCI, and Maza, directly or indirectly, singly or in concert, violated Section 10(b) of

the Exchange Act [15 U.S.C. § 78j(b)] and Rule lOb-5 thereunder [17 C.F.R. § 240.1Ob-5].

SECOND CLAIM FOR RELIEF
Violations of Section 17(a)(1)-(3) of the Securities Act

(Against Honig, Stetson, Brauser, O'Rourke, GRQ, Grander, HSCI, and Maza)

125. The Commission realleges and incorporates by reference herein each and every

allegation contained in paragraphs 1 through 121 of this Complaint.

126. By engaging in the acts and conduct described in this Complaint, Defendants

Honig, Stetson, Brauser, O'Rourke, GRQ, Grander, HSCI, and Maza, directly or indirectly,

singly or in concert, by use of the means or instruments of transportation or communication in

interstate commerce, in the offer or sale of Company A, Company B, and/or Company C

securities, have: (a) with scienter, employed devices, schemes, and artifices to defraud; (b)

knowingly, recklessly or negligently obtained money or property by means of any untrue

statements of a material fact or omitted to state a material fact necessary in order to make the

statements made, in the light of the circumstances under which they were made, not misleading;

or (c) knowingly, recklessly or negligently engaged in transactions, practices, or courses of

business which operated or would operate as a fraud or deceit upon purchasers of securities of

Company A, Company B, and/or Company C.

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127. By reason of the foregoing, Honig, Stetson, Brauser, O'Rourke, GRQ,

Grander, HSCI, and Maza, directly or indirectly, singly or in concert, have violated, are

violating, and unless restrained and enjoined, will continue to violate Sections 17(a)(1)-(3) of the

Securities Act [15 U.S.C. §§ 77q(a)(1)-(3)].

THIRD CLAIM FOR RELIEF
Violations of Section 10(b) of the Exchange Act and Rule lOb-5(b)

(Against Frost, FGIT, Ford, Ladd, and Keller)

128. The Commission realleges and incorporates by reference herein each and every

allegation contained in paragraphs 1 through 121 of this Complaint.

129. By engaging in the acts and conduct described in this Complaint, Defendants

Frost, FGIT, Ford, Ladd, and Keller, with scienter, directly or indirectly, singly or in concert, by

use of the means or instruments of transportation or communication in interstate commerce, or of

the mails, or of the facilities of a national securities exchange, in connection with the purchase or

sale of Company A, Company Band/or Company C securities, have made untrue statements of

material facts or omitted to state material facts necessary in order to make the statements made,

in light of the circumstances under which they were made, not misleading.

130. By reason of the foregoing, Frost, FGIT, Ford, Ladd, and Keller, directly or

indirectly, singly or in concert, violated Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)]

and Rule lOb-5(b) thereunder [17 C.F.R. § 240.1Ob-5(b)].

FOURTH CLAIM FOR RELIEF
Violations of Section 17(a)(2) of the Securities Act
(Against Frost, FGIT, Ford, Ladd, and Keller)

131. The Commission realleges and incorporates by reference herein each and every

allegation contained in paragraphs 1 through 121 of this Complaint.

132. By engaging in the acts and conduct described in this Complaint, Defendants

.~

Case 1:18-cv-08175   Document 1   Filed 09/07/18   Page 40 of 53Frost, FGIT, Ford, Ladd, and Keller, knowingly, recklessly or negligently, directly or indirectly,

singly or in concert, by use of the means or instruments of transportation or communication in

interstate commerce, in the offer or sale of Company A, Company B, and/or Company C

securities, have obtained money or property by means of any untrue statements of a material fact

or omitted to state a material fact necessary in order to make the statements made, in the light of

the circumstances under which they were made, not misleading.

133. By reason of the foregoing, Frost, FGIT, Ford, Ladd, and Keller, directly or

indirectly, singly or in concert, have violated, are violating, and unless restrained and enjoined,

will continue to violate Section 17(a)(2) of the Securities Act [15 U.S.C. § 77q(a)(2)].

FIFTH CLAIM FOR RELIEF
Violations of Section 10(b) of the Exchange Act and Rules lOb-5(a) and (c)

(Against ATG, Southern Biotech, and SCI)

134. The Commission realleges and incorporates by reference herein each and every

allegation contained in paragraphs 1 through 121 of this Complaint.

135. By engaging in the acts and conduct described in this, Complaint, Defendants

ATG, Southern Biotech, and SCI, with scienter, directly or indirectly, singly or in concert, by use

of the means or instruments of transportation or communication in interstate commerce, or of the

mails, or of the facilities of a national securities exchange, in connection with the purchase or

sale of Company A, Company Band/or Company C securities, have: (a) employed devices,

schemes, or artifices to defraud; or (b) engaged in acts, practices, or courses of business which

operated or would operate as a fraud or deceit upon any person.

136. By reason of the foregoing, ATG, Southern Biotech, and SCI, directly or

indirectly, singly or in concert, violated Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)],

and Rules lOb-5(a) and (c) thereunder [17 C.F.R. §§ 240.1Ob-5(a) and (c)].

41

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SIXTH CLAIM FOR RELIEF
Violations of Sections 17(a)(1) and (3) of the Securities Act

(Against ATG, Southern Biotech, and SCI)

137. The Commission realleges and incorporates by reference herein each and every

allegation contained in paragraphs 1 through 121 of this Complaint.

138. By engaging in the acts and conduct described in this Complaint, Defendants

ATG, Southern Biotech, and SCI directly or indirectly, singly or in concert, by use of the means

or instruments of transportation or communication in interstate commerce, in the offer or sale of

Company A, Company B, and/or Company C securities, have (a) with scienter, employed

devices, schemes, and artifices to defraud; or (b) knowingly, recklessly or negligently engaged in

transactions, practices, or courses of business which operated or would operate as a fraud or

deceit upon purchasers of securities of Company A, Company B, and/or Company C.

139. By reason of the foregoing, ATG, Southern Biotech, and SCI, directly or

indirectly, singly or in concert, have violated, are violating, and unless restrained and enjoined,

will continue to violate Sections 17(a)(1) and (3) of the Securities Act [15 U.S.C. §§ 77q(a)(1)

and (3)].

SEVENTH CLAIM FOR RELIEF
Aiding and Abetting Violations of Section

10(b) of the Exchange Act and Rules lOb-5(a) and (c) Thereunder
(Against Frost, Groussman, FGIT, Melechdavid, Opko, Ladd, and Keller)

140. The Commission realleges and incorporates by reference herein each and every

allegation contained in paragraphs 1 through 121 of this Complaint.

141. By engaging in the acts and conduct described in this Complaint, Defendants

Frost, Groussman, FGIT, Melechdavid, Opko, Ladd, and Keller directly or indirectly, singly or

in concert, provided knowing and substantial assistance to Honig, Stetson, Brauser, and

O'Rourke, who, directly or indirectly, singly or in concert with others, in connection with the

:~►

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purchase or sale of a security, with scienter, used the means or instrumentalities of interstate

coininerce or of the mails or of a facility of a national securities exchange to (a) employ devices,

schemes, or artifices to defraud; and (b) engage in acts, practices, or courses of business which

operated or would operate as a fraud or deceit upon others.

142. By reason of the foregoing, Frost, Groussman, FGIT, Melechdavid, Opko,

Ladd, and Keller, aided and abetted, and unless restrained and enjoined, will continue aiding and

abetting, Honig's, Stetson's, Brauser's, and O'Rourke's violations of Section 10(b) of the

Exchange Act [15 U.S.C. § 78j(b)], and Rules lOb-5(a) and (c) thereunder [17 C.F.R. § 240.1Ob-

5(a) and (c)] in violation of Section 20(e) of the Exchange Act [15 U.S.C. § 78t(e)].

EIGHTH CLAIM FOR RELIEF
Aiding and Abetting Violations of Sections 17(a)(1) and (3) of the Securities Act

(Against Frost, Groussman, FGIT, Melechdavid, Opko, Ladd, and Keller)

143. The Commission realleges and incorporates by reference herein each and every

allegation contained in paragraphs 1 through 121 of this Complaint.

144. By engaging in the acts and conduct described in this Complaint, Defendants

Frost, Groussman, FGIT, Melechdavid, Opko, Ladd, and Keller directly or indirectly, singly or

in concert, provided knowing and substantial assistance to Honig, Stetson, Brauser, and

O'Rourke, who, directly or indirectly, singly or in concert with others, in the offer or sale of a

security, used the means or instruments of transportation or communication in interstate

commerce or used the snails to (a) with scienter employed devices schemes, and artifices to

defraud; or (b) knowingly, recklessly or negligently engaged in transactions, practices, or courses

of business which operated or would operate as a fraud or deceit upon purchasers of securities of

Company A, Company B, and/or Company C.

145. By reason of the foregoing, Frost, Groussman, FGIT, Melechdavid, Opko,

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Ladd, and Keller, aided and abetted, and unless restrained and enjoined, will continue aiding and

abetting Honig's, Stetson's, Brauser's, and O'Rourke's violations of Sections 17(a)(1) and (3) of

the Securities Act [15 U.S.C. §§ 77q(a)(1) and (3)], in violation of Section 15(b) of the Securities

Act [15 U.S.C. § 77o(b)].

NINTH CLAIM FOR RELIEF
Violations of Section 9(a)(1) of the Exchange Act

(Against Honig, Brauser, O'Rourke, Groussman, ATG, and Melechdavid)

146. The Commission realleges and incorporates by reference herein each and every

allegation contained in paragraphs 1 through 121 of this Complaint.

147. By engaging in the acts and conduct described in this Complaint, Defendants

Honig, Brauser, O'Rourke, Groussman, ATG, and Melechdavid, directly or indirectly, singly or

in concert , by use of the mails or the means or instrumentalities of interstate commerce, or of a

facility of a national securities exchange for the purpose of creating a false or misleading

appearance of active trading in Company A, Company Band/or Company C securities, or a false

or misleading appearance with respect to the market for Company A, Company Band/or

Company C securities, entered an order or orders for the purchase and/or sale of such security

with the knowledge that an order or orders of substantially the same size, at substantially the

same tune and substantially the same price, for the sale and/or purchase of such security, had

been or would be entered by or for the same or different parties.

148. By virtue of the foregoing, Honig, Stetson, Brauser, O'Rourke, Groussman,

ATG, and Melechdavid violated, and unless restrained and enjoined, will continue violating

Section 9(a)(1) of the Exchange Act [15 U.S.C. § 78i(a)(1)].

..

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TENTH CLAIM FOR RELIEF
Violations of Section 9(a)(2) of the Exchange Act

(Against Honig, O'Rourke, and ATG)

149. The Commission realleges and incorporates by reference herein each and every

allegation contained in paragraphs 1 through 121 of this Complaint.

150. By engaging in the acts and conduct described in this Complaint, Defendants

Honig, O'Rourke, and ATG, directly or indirectly, singly or in concert , by use of the mails or

the means or instrumentalities of interstate commerce, or of a facility of a national securities

exchange effected, alone or with one or more other persons, a series of transactions in the

securities of Company Aand/or Company B creating actual or apparent active trading in such

security, or raising or depressing the price of such security, for the purpose of inducing the

purchase or sale of such security by others.

151. By virtue of the foregoing, Honig, O'Rourke, and ATG violated, and unless

restrained and enjoined, will continue violating Section 9(a)(2) of the Exchange Act [15 U.S.C. §

78i(a)(2)]•

ELEVENTH CLAIM FOR RELIEF
Sale of Unregistered Securities in Violation of Sections 5(a) and (c) of the Securities Act

(Against Honig, Brauser, Groussman, Frost, Grander, Melechdavid, and Alpha)

152. The Commission realleges and incorporates by reference herein each and every

allegation contained in paragraphs 1 through 121 of this Complaint.

153. By engaging in the acts and. conduct described in this Complaint, Defendants

Honig, Brauser, Groussman, Frost, Grander, Melechdavid, and Alpha, directly or indirectly,

singly or in concert, made use of the means or instruments of transportation or communication in

interstate commerce or of the mails to offer or sell securities through the use or medium of a

prospectus or otherwise, or carried or caused to be carried through the mails or in interstate

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coimnerce, by means or instruments of transportation, securities for the purpose of sale or for

delivery after sale, when no registration statement had been filed or was in effect as to such

securities, and when no exemption from registration was applicable. The shares of Company A

that Honig, Brauser, Groussman, Frost, Grander, Melechdavid, and Alpha offered and sold as

alleged herein constitute "securities" as defined in the Securities Act and the Exchange Act.

154. By reason of the foregoing, Honig, Brauser, Groussman, Frost, Grander,

Melechdavid, and Alpha have violated and unless restrained and enjoined will continue to violate

Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) & (c)].

TWELTH CLAIM FOR RELIEF
Violations of Section 13(d) of the Exchange Act and Rule 13d-1(a) Thereunder

(Against Honig, Stetson, Brauser, O'Rourke, Groussman, Frost, ATG, FGIT, GRQ,
Grander, HSCI, Melechdavid, Opko, Southern Biotech, and SCI)

155. The Commission realleges and incorporates by reference herein each and every

allegation contained in paragraphs 1 through 121 of this Complaint.

156. Pursuant to Exchange Act Section 13(d)(1) and Rule 13d-1(a) thereunder,

persons who directly or indirectly acquire beneficial ownership of more than 5% of a Section 12-

registered class of equity securities are required to file a Schedule 13D, or, in limited

circumstances, a Schedule 13G. Section 13(d)(3) plainly states that "act[ing] as a ... group" in

furtherance of acquiring, holding, or disposing of equity securities is enough to establish the

group as a single "person." When a group is required to make a Schedule 13D filing, that group

must "identify all members of the group."

157. Defendants Honig, Stetson, Brauser, O'Rourke, Groussman, ATG, GRQ,

Grander, Melechdavid, and SCI acquired and held beneficial ownership of more than 5%shares

in Company B from on or about October 8, 2015 to at least on or about May 20, 2016.

158. Honig, Stetson, and HSCI acquired and held beneficial ownership of more than

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5%shares in Company C from on or about February 2014.

159. Honig, Stetson, Brauser, O'Rourke, Groussinan, Frost, ATG, FGIT, GRQ,

Grander, HSCI, Melechdavid, Opko, Southern Biotech, and SCI acquired and held beneficial

ownership of more than 5%shares in Company C from on or about April 2015 to at least on or

about December 2015.

160. Honig, Stetson, Brauser, O'Rourke, Groussinan, Frost, ATG, FGIT, GRQ,

Grander, HSCI, Melechdavid, Opko, Southern Biotech, and SCI were sufficiently interrelated

that they constituted a group for the purposes of Exchange Act Section 13(d).

161. By engaging in the acts and conduct described in this Complaint, Defendants

Honig, Stetson, Brauser, O'Rourke, Groussman, Frost, ATG, FGIT, GRQ, Grander, HSCI,

Melechdavid, Opko, Southern Biotech, and SCI were each under an obligation to file with the

Commission true and accurate reports with respect to their ownership of the Company B and

Company C securities, and failed to do so.

162. By reason of the foregoing, Honig, Stetson, Brauser, O'Rourke, Groussinan,

Frost, ATG, FGIT, GRQ, Grander, HSCI, Melechdavid, Opko, Southern Biotech, and SCI

violated, and unless enjoined and restrained will continue to violate, Section 13(d)(1) of the

Exchange Act [15 U.S.C. § 78m(d)], and Rule 13d-1(a) thereunder [17 C.F.R. § 240.13d-1(a)].

THIRTEENTH CLAIM FOR RELIEF
Aiding and Abetting Violations of Section 13(a) of the Exchange Act and

Rules 12b-20 and 13a-1 Thereunder
(Against Ladd)

163. The Commission realleges and incorporates by reference herein each and every

allegation contained in paragraphs 1 through 121 of this Complaint.

164. By engaging in the acts and conduct described in this Complaint, Company B

violated Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and Rules 12b-20 [17 C.F.R. §

47

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240.12b-20] and 13a-1 [17 C.F.R. § 240.13a-1(a)] thereunder, which require issuers of registered

securities under the Exchange Act to file annual reports on Fonn 10-K with the Commission that,

among other things, do not contain untrue statements of material fact or omit to state material

information necessary in order to snake the required statements, in the light of the circumstances

under which they are made, not misleading.

165. By engaging in the acts and conduct described in this Complaint, Defendant

Ladd provided knowing and substantial assistance to Company B's filing of a materially false

and misleading annual report on Form 10-K.

166. By reason of the foregoing, Ladd aided and abetted, and unless restrained and

enjoined, will continue aiding and abetting, Company B's violations of Section 13(a) of the

Exchange Act [15 U.S.C. § 78m(a)], and Rules 12b-20 [17 C.F.R. § 240.12b-20] and 13a-1(a)

thereunder [17 C.F.R. § 240.13a-1(a)], in violation of Section 20(e) of the Exchange Act [15

U.S.C. § 78t(e)].

FOURTEENTH CLAIM FOR RELIEF
Aiding and Abetting Violations of Section 15(d) of the Exchange Act and

Rule 15d-1 Thereunder
(Against Maza and Keller)

167. The Commission realleges and incorporates by reference herein each and every

allegation contained in paragraphs 1 through 121 of this Complaint.

168. By engaging in the acts and conduct described in this Complaint, Company A

violated Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)] and Rule 15d-1 thereunder [17

C.F.R. § 240.15d-1 ], which require issuers of registered securities under the Securities Act to file

annual reports on Form 10-K with the Commission that, among other things, do not contain

untrue statements of material fact or omit to state material information necessary in order to

make the required statements, in the light of the circumstances under which they are made, not

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misleading.

169. By engaging in the acts and conduct described in this Complaint, Defendants

Maza and Keller provided knowing and substantial assistance to Company A's filing of a

materially false and misleading annual report on Fonn 10-K.

170. By reason of the foregoing, Maza and Keller aided and abetted, and unless

restrained and enjoined, will continue aiding and abetting, Company A's violations of Section

15(d) of the Exchange Act [15 U.S.C. § 78o(d)] and Rule 15d-1 thereunder [17 C.F.R. §

240.15d-1], in violation of Section 20(e) of the Exchange Act [15 U.S.C. § 78t(e)].

FIFTEENTH CLAIM FOR RELIEF
Violations of Section 17(b) of the Securities Act

(Against Ford)

171. The Commission realleges and incorporates by reference herein each and every

allegation contained in paragraphs 1 through 121 of this Complaint.

172. By engaging in the acts and conduct described in this Complaint, Defendant

Ford directly or indirectly, singly or in concert, by use of the means or instruments of

transportation or communication in interstate commerce, or by the use of the mails, in the offer

or sale of Company A, and/or Company C securities, has published, given publicity to, or

circulated any notice, circular, advertisement, newspaper, article, letter, investment service, or

communication which, though not purporting to offer a security for sale, described such security

for a consideration received or to be received, directly or indirectly, from an issuer, underwriter,

or dealer, without fully disclosing the receipt, whether past or prospective, of such consideration

and the amount thereof.

173. By reason of the foregoing, Ford, directly or indirectly, has violated, is

violating, and unless restrained and enjoined, will continue to violate Section 17(b) of the

.•

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Securities Act [15 U.S.C. § 77q(b)].

PRAYER FOR RELIEF

WHEREFORE, the Commission respectfully requests that the Court grant the following

relief, in a Final Judgment:

I.

Finding that Defendants violated the federal securities laws and rules promulgated

thereunder as alleged against them herein;

II.

Permanently restraining and enjoining Honig, Brauser, Frost, Groussman, Grander,

Melechdavid, and Alpha, their agents, servants, employees and attorneys and all persons in

active concert or participation with them who receive actual notice of the injunction by personal

service or otherwise, and each of them, from violating, directly or indirectly, Sections 5(a) and

(c) of the Securities Act [15 U.S.C. §§ 77e(a) and (c)];

III.

Permanently restraining and enjoining Honig, Stetson, Brauser, O'Rourke, Frost,

Groussman, Ladd, Maza, Keller, Ford, ATG, FGIT, GRQ, Grander, HSCI, Melechdavid, Opko,

Southern Biotech, and SCI, their agents, servants, employees and attorneys and all persons in

active concert or participation with them who receive actual notice of the injunction by personal

service or otherwise, and each of them, from violating, directly or indirectly, Section 17(a) of the

Securities Act [15 U.S.C. § 77q(a)];

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IV.

Permanently restraining and enjoining Ford, his agents, servants, employees and

attorneys and all persons in active concert or participation with them who receive actual notice of

the injunction by personal service or otherwise, and each of them, from violating, directly or

indirectly, Section 17(b) of the Securities Act [15 U.S.C. § 77q(b)];

V.

Permanently restraining and enjoining Honig, Brauser, O'Rourke, Groussman, ATG, and

Melechdavid, their respective agents, servants, employees and attorneys and all persons in active

concert or participation with them, who receive actual notice of the injunction by personal

service or otherwise, and each of theirs, from future violations of Section 9(a) of the Exchange

Act [15 U.S.C. § 78i(a)].

VI.

Permanently restraining and enjoining Honig, Stetson, Brauser, O'Rourke, Frost,

Groussman, Ladd, Maza, Keller, Ford, ATG, FGIT, GRQ, Grander, HSCI, Melechdavid, Opko,

Southern Biotech, and SCI, their respective agents, servants, employees and attorneys and all

persons in active concert or participation with them, who receive actual notice of the injunction

by personal service or otherwise, and each of them, from future violations of Section 10(b) of the

Exchange Act [15 U.S.C. § 78j(b)] and Rule lOb-5 thereunder [17 C.F.R. § 240.1Ob-5];

VII.

Permanently restraining and enjoining Honig, Stetson, Brauser, O'Rourke, Frost,

Groussman, ATG, FGIT, GRQ, Grander, HSCI, Melechdavid, Opko, Southern Biotech, and SCI,

their respective agents, servants, employees and attorneys and all persons in active concert or

participation with them, who receive actual notice of the injunction by personal service or

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otherwise, and each of them, from future violations of Section 13(d) of the Exchange Act [15

U.S.C. § 78in(d)] and Rule 13d-1(a) thereunder [17 C.F.R. § 240.13d-1(a)];

VIII.

Permanently restraining and enjoining Ladd, his respective agents, servants, employees

and attorneys and all persons in active concert or participation with them, who receive actual

notice of the injunction by personal service or otherwise, and each of them, from future

violations of Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and Rules 12b-20 [17

C.F.R. § 240.12b-20] and 13a-1 thereunder [17 C.F.R. § 240.13a-1];

IX.

Permanently restraining and enjoining Maza and Keller, their respective agents, servants,

employees and attorneys and all persons in active concert or participation with them, who

receive actual notice of the injunction by personal service or otherwise, and each of them, from

aiding and abetting future violations of Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)]

and Rule 15d-1 thereunder [17 C.F.R. § 240.15d-1];

/~

Permanently barring Ladd, Maza and Keller from acting as an officer or director of a

public company pursuant to Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)] and Section

21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)];

Permanently prohibiting all Defendants from participating in any offering of penny stock

pursuant to Section 20(g) of the Securities Act [15 U.S.C. § 77t(g)] and Section 21(d)(6) of the

Exchange Act [15 U.S.C. § 78u(d)(6)].

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XII.

Ordering Defendants to disgorge all of the ill-gotten gains from the violations alleged in

this complaint, and ordering them to pay prejudgment interest thereon;

XIII.

Ordering Defendants to pay civil money penalties pursuant to Section 20(d)(2) of the

Securities Act [15 U.S.C. § 77t(d)(2)] and Section 21(d)(3) of the Exchange Act [15 U.S.C.

§78u(d)(3)]; and

XIV.

Granting such other and further relief as this Court deems just and proper.

JURY DEMAND

Pursuant to Rule 38 of the Federal Rules of Civil Procedure, the Commission demands

trial by jury as to all issues so triable.

Dated: September 7, 2018
New York, New York

Sanjay Wadhwa
Michael Paley
Charu Chandrasekhar
Nancy Brown
Katherine Bromberg
Jon Daniels
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
200 Vesey Street, Suite 400
New York, New York 10281-1022
(212) 336-1023 (Brown)
Email: [email protected]

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