SEC v. Christopher R. Esposito; Anthony Jay Pignatello; James Gondolfe; Renee Galizio; Lionshare Ventures LLC; and Cannabiz Mobile, Inc., No. LR-23545, District of Massachusetts (May 26, 2016) — Press Release
raw: Christopher R. Esposito, et al.
Christopher R. Esposito, et al., No. LR-23545 (May 26, 2016)
The U
The U.S. Securities and Exchange Commission charged Christopher R. Esposito and three others—Anthony Jay Pignatello, James Gondolfe, and Renee Galizio—along with their companies Lionshare Ventures LLC and Cannabiz Mobile, Inc., for orchestrating a multi-phase fraud scheme involving over $850,000 in investor funds. Esposito misappropriated more than $300,000 from an unregistered Lionshare offering and used $75,000 to acquire control of Cannabiz, a shell company that falsely claimed to operate in the medical marijuana industry. To evade SEC Rule 144 restrictions on affiliate stock sales, Esposito concealed his control by installing Gondolfe as a nominal officer, falsifying public filings, and hiring promoters to inflate Cannabiz’s stock price, leading to the illegal sale of hundreds of millions of shares. The defendants are accused of violating Sections 10(b), 17(a), and 5(a)/(c) of the federal securities laws through fraud, unregistered offerings, and market manipulation. The SEC seeks injunctive relief, disgorgement, and civil penalties, with litigation led by David London and supported by FINRA.
The U.S. Securities and Exchange Commission charged Christopher R. Esposito and three others—Anthony Jay Pignatello, James Gondolfe, and Renee Galizio—along with their companies Lionshare Ventures LLC and Cannabiz Mobile, Inc., for orchestrating a multi-phase fraud scheme involving over $850,000 in investor funds. Esposito misappropriated more than $300,000 from an unregistered Lionshare offering and used $75,000 to acquire control of Cannabiz, a shell company that falsely claimed to operate in the medical marijuana industry. To evade SEC Rule 144 restrictions on affiliate stock sales, Esposito concealed his control by installing Gondolfe as a nominal officer, falsifying public filings, and hiring promoters to inflate Cannabiz’s stock price, leading to the illegal sale of hundreds of millions of shares. The defendants are accused of violating Sections 10(b), 17(a), and 5(a)/(c) of the federal securities laws through fraud, unregistered offerings, and market manipulation. The SEC seeks injunctive relief, disgorgement, and civil penalties, with litigation led by David London and supported by FINRA. The U.S. Securities and Exchange Commission (SEC) charged Christopher R. Esposito, Anthony Jay Pignatello, James Gondolfe, Lionshare Ventures LLC, and Cannabiz Mobile, Inc. with a fraudulent scheme involving the misappropriation of investor funds and the concealment of ownership control of a publicly-traded medical marijuana company, Cannabiz Mobile, Inc. Esposito raised over $550,000 from investors through an unregistered offering, spent $300,000 on unauthorized personal expenses, and used $75,000 to acquire control of Cannabiz. Between 2012 and 2015, Esposito and others concealed his control of Cannabiz to evade SEC Rule 144 and sold millions of shares into the public market, generating nearly $304,000. The defendants are alleged to have violated antifraud provisions and securities registration laws, with the SEC seeking enforcement through civil litigation.
Exhibits & Attached Documents (1)
Extracted insights
- $550K $550,000 $100K–$1M
- $304K $304,000 $100K–$1M
- $300K $300,000 $100K–$1M
- $75K $75,000 $10K–$100K
- person Christopher R. Esposito
- company in fraudulent scheme involving stock of medical marijuana industry company
- agency Securities and Exchange Commission
- organization Securities and Exchange Commission
- SEC announces charges in fraudulent scheme involving stock of medical marijuana industry company
- SEC conducted scheme to defraud investors by misappropriating investors funds and by concealing the ownership and control of a publicly-traded company
- Christopher R. Esposito charged in fraudulent scheme involving stock of medical marijuana industry company
- Securities and Exchange Commission announced charges four individuals and two companies for a fraudulent scheme involving misappropriation of investor funds and concealment of ownership of a publicly-traded medical marijuana company
- Christopher R. Esposito was charged in a fraudulent scheme involving misappropriation of investor funds and concealment of ownership of a publicly-traded medical marijuana company
U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 23545 / May 26, 2016 Securities and Exchange Commission v. Christopher R. Esposito, et al., Civil Action No. 16-CV-10960 (D. Mass. filed May 26, 2016) SEC Announces Charges in Fraudulent Scheme Involving Stock of Medical Marijuana Industry Company The Securities and Exchange Commission today announced charges against four individuals and two companies for their roles in conducting a scheme to defraud investors by misappropriating investors funds and by concealing the ownership and control of a publicly-traded company in order to enrich themselves by colluding in the sale of hundreds of millions of shares into the public market, in violation of SEC statutes and regulations. In a complaint filed in federal court in Boston, Massachusetts, the SEC alleges that Christopher R. Esposito, of Topsfield, Massachusetts, accomplished the first phase of his fraudulent scheme by raising more than $550,000 from investors between June 2011 and June 2012 in an unregistered offering of securities in his company Lionshare Ventures LLC, spending almost $300,000 of Lionshare investor funds for unauthorized personal expenses, and using $75,000 of Lionshare investor funds to acquire control of a Massachusetts-based publicly-traded company, Cannabiz Mobile, Inc., by purchasing all of its convertible debt. Cannabiz initially claimed to be in the business of mineral exploration and later claimed to be in the business of servicing businesses in the medical marijuana industry. According to the complaint, in the second phase of his fraudulent scheme, between May 2012 and August 2015, Esposito, with Anthony Jay Pignatello of Manhattan Beach, California, next concealed his de facto control of Cannabiz and a large percentage of Cannabiz's securities in order to profit by evading SEC Rule 144, which limits securities sales by affiliates, such as control persons. Esposito did this by, among other things, installing James Gondolfe of Cambridge, Massachusetts, as the sole officer and director of Cannabiz--even though Esposito secretly controlled the company-to make false statements in Cannabiz's public filings and other documents, paying third-party stock promoters to tout Cannabiz stock in order to increase its stock price and trading volume, selling significant amounts of Cannabiz convertible debt to others for almost $304,000, and with Pignatello and Renee Galizio of Loxahatchee, Florida, selling millions of shares of Cannabiz stock directly into the public market. The SEC's complaint alleges that Esposito, Pignatello, Gondolfe, Lionshare and Cannabiz violated, or aided and abetted violations of, the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933, and that all defendants violated the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act. The SEC's investigation was conducted by Scott R. Stanley, J. Lauchlan Wash, Mark Albers, Amy Gwiazda, and Michele Perillo of the SEC's Boston Regional Office. The SEC's litigation will be led by David London. The SEC appreciates the assistance of the Financial Industry Regulatory Authority (FINRA). SEC Complaint
U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 23545 / May 26, 2016 Securities and Exchange Commission v. Christopher R. Esposito, et al., Civil Action No. 16-CV-10960 (D. Mass. filed May 26, 2016) SEC Announces Charges in Fraudulent Scheme Involving Stock of Medical Marijuana Industry Company The Securities and Exchange Commission today announced charges against four individuals and two companies for their roles in conducting a scheme to defraud investors by misappropriating investors funds and by concealing the ownership and control of a publicly-traded company in order to enrich themselves by colluding in the sale of hundreds of millions of shares into the public market, in violation of SEC statutes and regulations. In a complaint filed in federal court in Boston, Massachusetts, the SEC alleges that Christopher R. Esposito, of Topsfield, Massachusetts, accomplished the first phase of his fraudulent scheme by raising more than $550,000 from investors between June 2011 and June 2012 in an unregistered offering of securities in his company Lionshare Ventures LLC, spending almost $300,000 of Lionshare investor funds for unauthorized personal expenses, and using $75,000 of Lionshare investor funds to acquire control of a Massachusetts-based publicly-traded company, Cannabiz Mobile, Inc., by purchasing all of its convertible debt. Cannabiz initially claimed to be in the business of mineral exploration and later claimed to be in the business of servicing businesses in the medical marijuana industry. According to the complaint, in the second phase of his fraudulent scheme, between May 2012 and August 2015, Esposito, with Anthony Jay Pignatello of Manhattan Beach, California, next concealed his de facto control of Cannabiz and a large percentage of Cannabiz's securities in order to profit by evading SEC Rule 144, which limits securities sales by affiliates, such as control persons. Esposito did this by, among other things, installing James Gondolfe of Cambridge, Massachusetts, as the sole officer and director of Cannabiz--even though Esposito secretly controlled the company-to make false statements in Cannabiz's public filings and other documents, paying third-party stock promoters to tout Cannabiz stock in order to increase its stock price and trading volume, selling significant amounts of Cannabiz convertible debt to others for almost $304,000, and with Pignatello and Renee Galizio of Loxahatchee, Florida, selling millions of shares of Cannabiz stock directly into the public market. The SEC's complaint alleges that Esposito, Pignatello, Gondolfe, Lionshare and Cannabiz violated, or aided and abetted violations of, the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933, and that all defendants violated the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act. The SEC's investigation was conducted by Scott R. Stanley, J. Lauchlan Wash, Mark Albers, Amy Gwiazda, and Michele Perillo of the SEC's Boston Regional Office. The SEC's litigation will be led by David London. The SEC appreciates the assistance of the Financial Industry Regulatory Authority (FINRA). SEC Complaint