Stock Promoter Sentenced to 7 Years in Prison in Multi-Million Dollar Securities Fraud Case
PHILADELPHIA – United States Attorney William M. McSwain announced that Dino Paolucci, age 42, of Mississauga, Ontario, was sentenced to 84 months’ imprisonment by United States District Judge Eduardo C. Robreno for participating in five stock manipulation schemes in 2012 and 2013. In addition, the Court also ordered Paolucci to pay $2 million in forfeiture.
Paolucci’s sentence arose from what is commonly referred to as a “pump and dump” scheme, stemming from his manipulation of the price and trading volume of the stock of five public companies: AGR Tools, Inc. (“AGRT”), LiveWire Ergogenics (“LVVV”), YaFarm Technologies (“YFRM”), Resource Ventures (“REVI”), and Medical Cannabis Payment Solutions (“REFG”). As part of these manipulations, Paolucci and his co-schemers obtained control over the companies, distributed shares of stock to themselves and their nominees through fraudulent means, issued false and misleading press releases and promotions regarding the companies in order to artificially inflate the price and/or trading volume of the stocks, and then sold their shares into the manipulated markets – thereby reaping millions. For good measure, they also concealed all of their illegal activity from the U.S. Securities and Exchange Commission (the “SEC”).
Paolucci played a critical role in the scheme by orchestrating the false and misleading promotions used to “pump up” the stocks in question. He issued most of his promotions by widely distributing email newsletters (“email blasts”) touting the stocks under various business names, including the Bull Exchange, Market Bulls, Best Penny Newsletter, Gain the Green, Insane Pennies, OTC Market Alerts, and Penny Players Club. While Paolucci was disseminating the email blasts, he was also coordinating with his co-schemers regarding the press releases being issued and the stock that they were selling. All of this coordination, however, was hidden from the market and the SEC. For example, Paolucci and his fellow schemers used offshore corporations and brokerage accounts, as well as fake corporations, intermediaries, and even fake names, causing tens of millions of dollars of losses to investors while gaining millions in profits for themselves.
“The United States’ securities laws exist to safeguard the integrity of the markets and to protect individual investors who play by the rules. Accordingly, they must be vigorously enforced,” said U.S. Attorney McSwain. “Schemers like Paolucci and his co-conspirators work hard to cover their tracks, while defrauding investors and harming our securities markets. But we will work even harder to track them down and bring them to justice.”
“Paolucci tricked people into investing under false pretenses, and those victims’ losses became his ill-gotten gains,” said Michael T. Harpster, Special Agent in Charge of the FBI’s Philadelphia Division. “While investors know they’re taking a chance when buying securities, they don’t anticipate the odds being stacked against them from the get-go. This case underscores the FBI’s commitment to protecting the investing public and bringing ‘pump and dump’ fraudsters to justice.”
The case was investigated by the Federal Bureau of Investigation - Philadelphia and Boston Field Offices, with assistance from the Securities and Exchange Commission Offices in Chicago and Boston, the U.S. Department of Justice's Office on International Affairs, the Alberta Securities Commission, and the United States Attorney's Office for the District of Massachusetts. It is being prosecuted by Assistant United States Attorneys Patrick Murray and Judy Smith.