SEC charges microcap stock financing scammers


Lucrative Pips Corporation charged with fraud, fined more than $2 million

The U.S. Securities and Exchange Commission (SEC) opened fraud charges against four individuals and businesses related to them for offering illegal securities and for their participation in two microcap frauds. According to the SEC, the fraudulent schemes generated about $25 million in illegal profits for the individuals and their businesses.

The SEC charges allege that the four individuals through their business Magna Group, a microcap stock financier, participated in a fraudulent scheme between December 2012 and June 2013. The scheme hatched by Magna Group founder Joshua Sason acquired counterfeit promissory notes, which they claimed were issued by Lustros Inc., then converted them into Lustros shares and sold them to unsuspecting individual investors.

The counterfeit shares sold by Magna Group diluted the value of the existing legal shares of Lustros Inc, and the SEC alleges that Marc Manuel the company’s former head of research personally negotiated and facilitated many of these illegal transactions.

The SEC also alleges that Sason and Manuel through another entity, Magna Equities II, gave false testimony to a court while retiring the sham debts.

Sanjay Wadhwa, a Senior Associate Director at the SEC’s New York Office clarified that:

As alleged in our complaint, Magna Group and its co-defendants used fake debt instruments to unlawfully obtain shares in microcap companies, which they then dumped on unsuspecting retail investors.

This action demonstrates the resolve of the SEC in pursuing fraudsters who use elaborate financing schemes to engage in securities fraud.

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SEC charges microcap stock financing scammers

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