Craig Josephberg Accused of Securities Fraud Relating to Massive Pump and Dump Scheme
Craig L. Josephberg, associated with Meyers Assocaites, L.P. and formerly associated with Halcyon Cabot Partners, Ltd., is accused of committing securities fraud relating to a series of pump and dump schemes, according to a complaint filed by the Securities and Exchange Commission.
The Peiffer Rosca securities practice attorneys Alan Rosca and Joe Peiffer are currently investigating the matter.
Craig L. Josephberg and Matthew A. Bell conspired with Marc E. Wexler, President of OmniView Capital Advisors LLC, and Abraxas J. Discala, CEO of OmniView, to inflate the price of the stock of CodeSmart Holdings, Inc., according to the complaint filed by the SEC. Discala, Wexler, Bell, and Josephburg then profited by selling their shares at inflates values at the expense of Bell’s clients and Josephberg’s customers, according to the complaint.
Ira Shapiro served as CodeSmart’s CEO and also participated in the manipulative scheme by issuing materially misleading statements in press releases on at least three occasions in order to increase the price and volume of the stock, according to the SEC.
After CodeSmart’s reverse merger into a public shell company that occurred in May 2013, Discala and his associates, including Wexler, Bell, and Josephberg, proceeded to gain control of 3,000,000 shares of CodeSmart. The obtained shares were restricted and were not to be sold or offered to the general public, according to the SEC.
Discala and Wexler flooded the market with CodeSmart’s shares later in May 2013, according to the complaint. Discala and Wexler found buyers in Bell’s advisory clients and Josephberg’s brokerage customers, according to the SEC. Bell and Josephberg allegedly received 125,000 purportedly unrestricted shares of CodeSmart for pennies in exchange for investing their client and customer base in CodeSmart stock, which in many cases consisted of their client’s and customer’s retirement funds, according to the complaint. Additionally, Bell and Josephberg personally sold their CodeSmart shares on the market while simultaneously purchasing CodeSmart’s stock in the accounts of their clients and customers, according to the complaint.
Bell and Josephberg failed to disclose to their clients and customers their financial incentive to purchase CodeSmart shares for them and sold the shares to their clients and customers knowing that the price had been inflated at the discretion of Discala and Wexler – the masterminds of the scheme, according to the SEC.
The scheme was effective in manipulating the market in CodeSmart’s stock, according to the SEC. CodeSmart stock reached $6.94 on July 12, 2013 – equating to a market capitalization of over $100 million. Over a month later, on August 20, 2013, CodeSmart’s stock price was $4.60, which equated to a market capitalization of over $86 million. These valuations had no relationship to CodeSmart’s true worth as indicated in its publicly available financial statements, according to the complaint. The only publicly available financial information for CodeSmart revealed that the company had minimal assets and was operating at a loss. Soon after Discala, Wexler, Bell, and Josephberg decreased their trading of CodeSmart stock, CodeSmart’s stock price crashed, according to the complaint.
Discala, Wexler, Bell, Josephberg, and Shapiro profited greatly from the scheme, according to the SEC. Discala and Wexler gained millions of dollars from their participation while Bell and Josephberg both received over $500,000 of illicit gains, according to the complaint. Shapiro received a $225,000 salary from CodeSmart and received financial support from a Discala-controlled entity, according to the SEC.
In 2014, Discala, Wexler, Bell, and others have conspired to manipulate securities from two other publicly traded companies, The Staffing Group, Ltd. and Cubed, Inc., by coordinating their trading in the securities of these companies to create a false appearance of market activity, according to the SEC. Cubed stock ultimately increased to $6.58 on June 24, 2014, which translated into a market capitalization of $170 million, even though Cubed’s public filings indicated it had minimal assets, according to the SEC.
The Peiffer Rosca securities attorneys often represent investors who lose money as a result of Ponzi schemes, investment fraud, or stockbroker misconduct. They are currently investigating the possibility of assisting victims with the recovery of their losses. They take most cases of this type on a contingency fee basis and advance the case costs, and only get paid for their fees and costs out of money they recover for their clients.
Investors who believe they lost money as a result of investment fraud or misconduct may contact the securities lawyers at Peiffer Rosca, Alan Rosca or Joe Peiffer, for a free, no-obligation evaluation of their recovery options, at 888-998-0520.
Broker: Craig L. Josephberg
Status: INVESTIGATED by Peiffer Rosca.
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