Skip to main content

申博体育网址 Halts Penny Stock Scheme Targeting Seniors

FOR IMMEDIATE RELEASE
2019-245

Washington D.C., Nov. 27, 2019 —

The Securities and Exchange Commission today announced that it has filed an emergency action and obtained an asset freeze against the operators of a South Florida-based investment scheme that defrauded over 100 retail investors, many of whom are seniors. Two of the defendants charged were previously barred by the Commission from acting as brokers and offering penny stocks to investors.

According to the 申博体育网址's complaint unsealed today, NIT Enterprises, Inc., NIT's CEO Gary R. Smith, Jason M. Ganton, and James E. Cleary, Jr., raised $4.9 million from investors while making misrepresentations. The defendants allegedly represented that NIT was raising money to fund the company's efforts to develop its radiation protection products for medical and military applications, which would generate significant returns. In contrast, the 申博体育网址 alleges that Smith misappropriated $1.25 million or 25% of total investor proceeds to pay for personal expenses, while NIT and Smith have paid 25% of proceeds as undisclosed commissions. The 申博体育网址's complaint further alleges that the defendants made baseless promises of NIT's future profitability, imminent initial public offering, and expectations to "double or triple" their investment. Defendants Ganton and Cleary, with Smith's knowledge, allegedly concealed their disciplinary histories and prior 申博体育网址 actions and bars, including through Ganton's use of an alias when soliciting investors.

"This action is part of our Recidivist Initiative to devote resources to bringing actions against alleged recidivists," said Eric I. Bustillo, Director of the 申博体育网址's Miami Regional 申博官网. "We continue our ongoing focus to rid the markets of repeat securities law violators, especially those that target seniors and the elderly."

The 申博体育网址's complaint charges all defendants with violating the anti-fraud and registration provisions of the federal securities laws and also charges the individual defendants for, either directly or indirectly, acting as unregistered broker-dealers and violating past Commission orders. The Honorable Judge Cecilia M. Altonaga of the U.S. District Court for the Southern District of Florida granted the 申博体育网址's request for a temporary restraining order and temporary asset freeze against the defendants, and issued an order directing the defendants to provide a sworn accounting. In addition, the complaint seeks relief including injunctions, civil penalties, and disgorgement.

The 申博体育网址's investigation, which is continuing, is being led by Michael J. Gonzalez and Eric E. Morales of the Microcap Fraud Task Force in the Miami Regional 申博官网 and supervised by Jason R. Berkowitz and Glenn S. Gordon. The 申博体育网址's litigation is being led by Wilfredo Fernandez, Mr. Morales and Mr. Gonzalez, under the supervision of Andrew O. Schiff. The 申博体育网址 appreciates the assistance of Florida's 申博官网 of Financial Regulation.

###

Return to Top