Three South Florida men have been arrested as part of a ring of cannabis stock manipulators by the Northern Ohio Department of Justice.
Charles Vaccaro, Eli Taieb, and Dror Svorai were all charged with securities fraud, wire fraud, and conspiracy after two FBI agents went undercover posing as bad actors willing to funnel the trio’s illegal stock gains back into their U.S. bank accounts.
The cannabis stocks involved in the scheme include: PotNetwork Holdings, Vaper Group, and White Label Liquid.
All three men were released on million dollar secured bonds and Taieb and Svorai had to turn over their passports. Svorai was assigned a GPS tracking ankle bracelet.
The scheme involved the men using private investment companies they owned to make PIPE investments in the stocks eventually owning up to around 20% of the company. PIPE’s are a public investment in a private entity achieved through making a debt investment that converts to common stock when the company can’t pay the high interest loan. It’s often known as death spiral investing because the conversion rates enable the investors to get millions of shares with relatively small investments. By operating in this fashion the three men investing as an undisclosed group means that public shareholders cannot see how much ownership control of the stock they really have.
Charles Vaccaro first made contact with the undercover FBI agent in July 2019 when he said he was looking for someone to help them liquidate around $100 million in stock in multiple companies and it had to be processed in a foreign brokerage account because the Securities and Exchange Commission was getting tougher on U.S. broker dealers liquidating large blocks of penny stock.
Read more at cannabislaw.report