The US Securities and Exchange Commission (SEC) has issued additional charges against First Choice Healthcare Solutions’ chief executive Christian Romandetti.
Romandetti’s company, which is based in Long Island, New York, had already been charged with defrauding “elderly and unsophisticated investors”.
The SEC has ordered to the defendants to give back the money obtained illegally and to pay a monetary fine.
The US regulator found that Romandetti and four others manipulated the company’s shares via the boiling room scheme.
Over 100 people fell victim to the inflated stock prices for First Choice, which was increased from $1 to $3.40 per share generating more than $3,3m (£2.6m, €2.9m) of illegal profits and $560,000 in kickbacks for the chief executive.
The SEC recorded complaints from between September 2013 to June 2016, where the five people used different accounts to disguise and manipulate their trading.
They also hired Elite Stock Research, a boiler room run by one of the five defendants, Antony Vassallo, to promote First Choice to vulnerable investors.
Some of the 100 victims used their retirement savings to invest in the scam.
“Microcap fraud continues to be a pervasive source of harm to retail investors,” said Carolyn Welshhans, associate director of the SEC’s division of enforcement.
“Investors should be on the lookout for individuals employing methods like the ones we allege in our complaint—such as using unsolicited calls and high-pressure sales tactics.”
In July 2017, the SEC also charged Elite Stock Research, as well as another Long Island boiler room and 13 people. They managed to get $10m by using high-pressure sales tactics and lying about penny stocks.
