Two Defendants Charged with Stealing or Misusing $20 Million in Supplemental Nutrition Assistance Program Benefits
A criminal complaint was unsealed today in federal court in Brooklyn charging Bruce Schoengood, the chief executive officer of Medifirst Solutions, Inc. (MFST"), a publicly-traded company, with securities fraud in connection with a scheme that yielded hundreds of thousands of dollars in profits for Schoengood and others, while defrauding MFST investors. Schoengood was arrested earlier today and made his initial appearance this afternoon via videoconference before United States Magistrate Judge Robert M. Levy. The defendant was released on a $500,000 bond.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the charge.
“CEOs of publicly-traded companies cannot enrich themselves at the expense of investors by illegally manipulating the stock of their companies,” stated Acting United States Attorney DuCharme. “This Office is committed to upholding the integrity of financial markets and to prosecuting, to the fullest extent of the law, company executives who abuse investors' trust.” Mr. DuCharme expressed his grateful appreciation to the U.S. Securities and Exchange Commission for its assistance with the case.
“As alleged, Schoengood stood to illegally profit from the exploitation of his victims, whom he defrauded through manipulative practices carried out in relation to the purchase and sale of stock for Medifirst Solutions, Inc. These illegal business practices, while all too common, tend to catch the eye of federal investigators. The FBI is committed to bringing to justice all those who attempt to defeat the integrity of the financial markets in this way,” stated FBI Assistant Director-in-Charge Sweeney.
According to the complaint, between May 2016 and January 2019, Schoengood, together with others, engaged in a scheme to defraud MFST investors by manipulating the volume of MFST stock and concealing the sale of that stock by others. Specifically, Schoengood entered into sham consulting agreements with a co-conspirator (Co-Conspirator 1) so that Co-Conspirator 1 would appear to be working for MFST. Schoengood then transferred MFST stock to Co-Conspirator 1 and made false statements in public filings and related filings to enable the shares to be deposited and sold by Co-Conspirator 1, so that Co-Conspirator 1 and an investment relations firm could participate in the undisclosed promotion of MFST stock. Schoengood also issued stock to co-conspirators so that they could sell their shares into the artificially created volume by Co-Conspirator 1 and the investment relations firm, then “kickback” portions of the proceeds to Schoengood.
The charge in the complaint is an allegation, and the defendant is presumed innocent unless and until proven guilty. If convicted of securities fraud, Schoengood faces up to 20 years in prison.
The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorney Hiral D. Mehta is in charge of the prosecution.
Manalapan, New Jersey
E.D.N.Y. Docket No. 20-MJ-206
United States Attorney’s Office