Monmouth County, New Jersey Stock Promoter Admits Role in $33 Million Microcap Stock Manipulation Scheme
NEWARK, NJ—A Holmdel, New Jersey, man today admitted his role in a stock market manipulation scheme that artificially inflated the stock price of four publicly traded companies through manipulative trading and other fraudulent means, U.S. Attorney Paul J. Fishman announced.
Samuel DelPresto, 48, pleaded guilty today before U.S. District Judge Jose Linares in Newark federal court to an information charging him with conspiracy to commit securities fraud.
According to the documents filed in this case and statements made in court:
From 2008 through 2010, DelPresto, a penny stock promoter who owned and operated MLF Group LLC, participated in an extensive “pump-and-dump” scheme in which he and others fraudulently inflated the prices of certain shares in order to sell them later at artificially inflated prices. The scheme involved four public companies: BioNeutral Group Inc. (BONU), NXT Nutritionals Holdings Inc. (NXTH), Mesa Energy Holdings Inc. (MSEH), and Clear-Lite Holdings Inc. (CLRH) (collectively, the “Target Companies”).
As part of the scheme, DelPresto and others first obtained control over large blocks of the free trading shares of the Target Companies. Next, DelPresto and others “pumped” the price of those shares by, among other things, engaging in manipulative trading of the stocks of the Target Companies and disseminating promotional materials encouraging others to purchase them. After pumping the stocks, DelPresto and the other conspirators “dumped” them by selling large volumes of the Target Companies’ stock to victim investors. The target companies’ stock price would then drop, resulting in losses to the victims.
In order to fraudulently inflate the price and volume of the Target Companies’ stocks, DelPresto’s conspirators paid cash kickbacks to an investment advisor in Las Vegas so that he would purchase the Target Companies’ stock on behalf of his clients. The purpose of these purchases was to, among other things, create the false appearance of market interest and demand in the stock; build trading volume that would be attractive to potential investors who would later receive promotional materials about the stock; and generate income to fund the promotional campaigns, including e-mail blasts and newsletters, that occurred in the later phases of the scheme. Additionally, DelPresto and other conspirators engaged in coordinated trading of the Target Companies’ stock using various brokerage accounts that they owned or controlled, including the accounts of friends, family and other third parties.
The scheme collectively generated approximately $33 million in illicit trading proceeds, of which DelPresto received approximately $13 million.
The conspiracy count to which DelPresto pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gain or loss from the offense. Sentencing is scheduled for April 5, 2016.
The U.S. Securities and Exchange Commission (SEC) filed a civil complaint against DelPresto today.
U.S. Attorney Fishman credited special agent s of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark, for the investigation leading to DelPresto’s guilty plea. He also thanked the SEC’s New York Regional Office, under the direction of Andrew Calamari, for its assistance in this matter.
The government is represented by Assistant U.S. Attorney Nicholas P. Grippo of the U.S. Attorney’s Office Economic Crimes Unit.
Defense Counsel: Jack Arsenault Esq., Chatham, New Jersey