SEC Charges Florida Man With Penny Stock Fraud

On March 9th, 2018, the Securities and Exchange Commission (SEC) filed a civil complaint against Brian Robert Sodi, a penny stock promoter based in South Florida. According to the SEC, Mr. Sodi engaged in a classic ‘pump and dump’ scheme, confidentially buying up shares of lightly traded securities, then dumping all of his holdings after publicly touting the very same stock. In addition to the civil penny stock fraud claim brought by the SEC, the United States Department of Justice (DOJ) has also filed criminal securities fraud charges against Brian Robert Sodi. If convicted on the criminal charges, Mr. Sodi could face considerable prison time.

Understanding the Penny Stock Fraud Scheme

The Penny Stocks 

Federal regulators allege that Mr. Sodi began to push his scheme in the first half of 2013. At that time, he purchased large stakes in two penny stock companies: Southern USA Resources Inc (SUSA) and Goff Corporation (GOFF). Both of these companies operated in the gold mining business. Soon after purchasing the stakes, Mr. Sodi conducted a secretive touting campaign. Unsuspecting investors were sent marketing materials ‘pumping’ up the idea that both of these stocks were about to see massive increases in price. In some of the marketing materials, projected growth was promised to be higher than 3,300 percent. 

The Fraud  

Not only was there nothing to support the promises made by Mr. Sodi, but he also had large undisclosed personal shares of these securities. For example, the SEC’s complaint alleges that Mr. Sodi’s experienced marketing campaign was able to pump the stock price of SUSA up from $0.13 per share to a high closing price of $1.66 per share. When he quickly sold all his positions in these penny stocks, the SEC contends that Mr. Sodi was able to capture more than $1.1 million in ill-gotten gains.

Allegations of ‘Scalping’ 

If these allegations are proven to be true, then Brian Robert Sodi engaged in a securities fraud scheme that is commonly referred to as ‘scalping’. This type of investment fraud scheme is often associated with low-priced, lightly-traded securities (penny stocks). In its legal complaint that was filed in the United States District Court for the Northern District of Alabama, the agency alleges that Mr. Sodi’s conduct met all four legal requirements of scalping:

1. Acquiring shares of a stock for a person’s own personal financial benefit;
2. Publicly touting the stock to unsuspecting investors;
3. Failing to disclose ownership of the stock; and
4. Immediately dumping massive quantities of the stock when the price increases.
   

Contact Our Miami Penny Stock Fraud Lawyers Today

At Carlson & Associates, P.A, our legal practice is dedicated to protecting investors. If you or a family member sustained major losses in penny stocks, you may have been the victim of investment fraud or broker negligence. To get a fully confidential, no obligation review of your legal claim, please call us today at 1-(305)-372-9700 or reach out to us online. With an office in the heart of Miami, we represent investors all around Florida, including in Palm Beach County and Broward County.

Resources:

justice.gov/usao-ndal/pr/boca-raton-man-arrested-securities-fraud-and-mail-fraud-conspiracy

sec.gov/news/press-release/2018-38