Toronto (August 6, 2020) – The Ontario Securities Commission (OSC) is seeking to ban convicted securities fraudster, Dino Paolucci, who is currently serving his seven-year sentence in the U.S. for a multi-million dollar securities fraud. The former penny stock promoter has been sentenced for participating in five stock manipulation schemes in 2012 and 2013. The Canadian is now facing possible regulatory sanctions in Canada such as trading and registration bans.
The Canadian, Dino Paolucci, who is convicted for securities fraud in the U.S., is now facing possible regulatory sanctions in Canada for his multi-million dollar securities fraud, according to the OSC’s statement of allegations issued on August 4 of this year. The OSC issued a notice of hearing against the former penny stock promoter from Mississauga.
U.S. multi-million dollar securities fraud case
After pleading guilty to four counts of securities fraud, the U.S. district court for the Eastern District of Pennsylvania sentenced Paolucci on December 10, 2019, to 84 months in prison and ordered him to pay US$2 million forfeiture.
The convictions stem from a series of pump-and-dump schemes in 2012 and 2013 involving five over-the-counter (OTC) companies: AGR Tools, Inc. (‘AGRT’), LiveWire Ergogenics (‘LVVV’), YaFarm Technologies (‘YFRM’), Resource Ventures (‘REVI’), and Medical Cannabis Payment Solutions (‘REFG’). The former Ontario resident participated in a scheme to manipulate the price and trading volume of the five public stocks.
According to the U.S. court documents, Paolucci and his co-schemers gained control over the companies. Then, they artificially inflated the price and trading volume of the penny stocks by creating an illusion of market interest using coordinating company press releases with promotional campaigns. Subsequently, they sold their shares into the manipulated markets and gained millions in profits for themselves.
To hinder the U.S. Securities and Exchange Commission (SEC) from detecting the stock manipulation scheme, Paolucci and his co-schemers used offshore corporations and brokerage accounts, as well as fake corporations, intermediaries, and even fake names.
‘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.’
Paolucci is currently serving his seven-year sentence in the U.S.
OSC is seeking an enforcement order
On August 5, the OSC issued a notice of hearing against Paolucci. The regulator is now seeking an enforcement order for his securities offenses. ‘Staff seek an inter-jurisdictional enforcement order reciprocating Paolucci’s conviction,’ the regulator said in its statement of allegations.
The OSC staff alleged that it would be in the public interest to make an order against the Canadian citizen. The purpose of the hearing proceeding will be to consider whether that is the case or not.
Paolucci could face regulatory sanctions by the OSC including trading and registration bans in Ontario. He has 28 days to respond to the allegations in a written hearing or 21 days to request an oral hearing instead.
Marina Burghard writes for Canadian Fraud News about fraud-related cases, whistleblower, jurisdiction, identity theft, consumer protection, etc. – essentially about scams and how to protect yourself against this kind of fraudulent criminal behavior. She holds a Master’s degree in Political Science where her interest in criminology grew. Besides fraud, Marina’s scientific interest lies in terrorism, extremism and how to deal with it as a society.