SEC Charges Three With Penny Stock Fraud in Florida

On September 23rd, 2024, the Securities and Exchange Commission (SEC) announced civil securities fraud charges against three people in Florida: Benjamin Ballout, Mohamed Zayed, and William Fielding. They are accused of engaging in a penny stock fraud scheme—a classic “pump and dump” operation—related to the publicly traded stock for Enerkon Solar International, Inc. In this article, our Miami penny stock fraud attorney discusses the charges in more comprehensive detail.

The Charges: Penny Stock Fraud in Florida (Enerkon Solar International, Inc.) 

As alleged in the complaint filed by the SEC in the U.S. District Court for the Southern District of Florida, Benjamin Ballout was the Chief Executive Officer (CEO) of Enerkon Solar International, Inc. Enerkon Solar was a publicly traded company. According to the SEC, Mr. Ballout published three press releases in 2021 that falsely stated that the company had obtained the rights for the distribution of an instate COVID-19 test. With support from Mohamed Zayed, and William Fielding, a false purchase order was created. It stated that the company had a $28 million purchase agreement for the COVID-19 tests. In reality, there was no such order.

The SEC contends that the three co-conspirators used the false information to “pump” up the stock price for Enerkon Solar. Mr. Ballot reportedly dumped more than 2.6 million shares of the stock on a third party investor. The total sale was worth more than $400,000. Mr. Ballout then transferred approximately $100,000 to Mr. Zayed and Mr. Fielding to compensate them for their role in the penny stock fraud scheme. In reality, the company had little legitimate underlying business. Notably, in the Summer of 2021, the SEC suspended all trading for Enerkon Solar.

 Understanding Pump and Dump Schemes 

Penny stocks are low-priced securities. They are thinly-traded stocks and are notoriously risky for investors. Unfortunately, penny stock fraud is a serious problem. One of the most common forms of penny stock is a pump and dump scheme. Broadly described, a pump and dump scheme is a deceptive strategy used to artificially inflate the price of an asset—such as a stock—through false or materially misleading statements.

Perpetrators behind these schemes typically hold an established position in a low-priced or thinly-traded asset. They “pump” up the asset’s value by promoting overly positive news via social media, email campaigns, official press releases, or other methods of widespread communication to attract unsuspecting investors. As new investors purchase the asset, its price skyrockets. Once the asset reaches a significantly higher price, the schemers “dump” their holdings by selling them at the inflated price. The sudden sell-off causes the asset price to plummet. Investors are stuck with losses.

Get Help From a Miami Penny Stock Fraud Lawyer Today

At ​Carlson & Associates, P.A., our Miami securities fraud attorney has the skills, knowledge, and experience to take on all types of penny stock fraud cases. If you or your family member suffered losses due to penny stock investments, you may have a viable claim. Contact us at our Miami law office today to learn more about what our legal team can do for you.

Source:

sec.gov/enforcement-litigation/litigation-releases/lr-26122