SEC Charges Four in Scheme to Artificially Gin Up Demand for Stock

Chris Gaetano
Published Date:
May 16, 2018

While it seemed that demand for stock in the company Biozoom was really taking off, the SEC said this rise was due to manipulation from four individuals who traded shares among each other in order to pump up demand and, incidentally, the value of their investments. The defendants—Francisco Abellan Villena, Guillermo Ciupiak, James B. Panther and Faiyaz Dean—have been charged with selling illegal, unregistered shares of the micro-cap company Biozoom, and manipulating its market demand. 

The SEC said the four acquired all the shares of an inactive shell company, which they then merged with a German biomedical firm, resulting in the creation of Biozoom Inc. and the conversion of all their shares into Biozoom shares. These shares were then deposited into an elaborate network of U.S. brokerages. Beginning May 16, 2013, the four then began trading these shares among themselves at ever-increasing prices, coordinating bids in order to keep the share price high. To bolster demand, they also created elaborate online, print and radio promotional campaigns that coincided with the manipulative trading. This process increased Biozoom's stock value from $1.10 a share to $4.50 in just one month. They then sold these shares to retail investors and made a $34 million profit. Very shortly afterward, the SEC suspended traded in Biozoom shares, and froze all proceeds from the sale. 

“Manipulative and deceptive conduct undermines the integrity of our markets,” said Antonia Chion, Associate Director in the SEC’s Division of Enforcement. “The charges announced today demonstrate our commitment to unraveling even the most sophisticated international schemes that exploit retail investors.”

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