The United States Securities and Exchange Commission (SEC) has filed charges against financier Joshua Sason and his company Magna Group for “elaborate microcap stock fraud”.
Last Friday (February 15), the SEC issued a statement outlining alleged illegal transactions worth $25 million carried out by Sason and three other defendants. (None of these transactions relate to Pledge, but instead other investments of Magna’s.)
According to the SEC, Magna Group “engaged in a scheme to acquire fake convertible promissory notes”, which were supposedly issued by penny stock issuer Lustros Inc.
Those notes were then converted into shares of Lustros common stock, which were then sold to unsuspecting retail investors unaware that the shares were being sold illegally.
The other defendants named are Marc Manuel, Magna Group’s former head of research and due diligence, whom the SEC states “personally negotiated and executed the sham transactions”, Kautilya ‘Tony’ Sharma and Perian Salviola, who controlled Pallas Holdings, from which the SEC alleges that Sason and Manuel purchased another fake promissory note via Sason’s Magna Equities II.
In 2015 Bloomberg published an article in which the 31-year-old Magna founder was described as having “made millions riding the death spiral of penny stocks”.
In that article Bloomberg said that what Sason had “discovered is a way to get shares in desperate and broke companies at big discounts by lending them money”.
The SEC’s investigation was conducted by Lee A. Greenwood, Philip A. Fortino, John O. Enright, Christopher Ferrante, Diego Brucculeri, and Sheldon L. Pollock of the New York office.
“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,”
Sanjay Wadhwa, SEC
“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,” said Sanjay Wadhwa, Senior Associate Director of the SEC’s New York Regional Office.
“This action demonstrates the resolve of the SEC in pursuing fraudsters who use elaborate financing schemes to engage in securities fraud.”Music Business Worldwide