Fortitude Group, Inc. (FRTD)

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http://www.goerie.com/news/20170304/ex-erie-penny-stock-company-found-in-default

A former Erie-based company that traded in penny stock has lost a fraud lawsuit by default to the Securities and Exchange Commission.

The case, involving civil charges of a "pump-and-dump" stock scheme, is heading toward the same resolution against the suit's other defendant, who is the company's chief executive.


A federal judge on Friday ordered the default judgment against the company, the Fortitude Group Inc.

U.S. District Judge Barbara Rothstein granted the judgment at the request of the SEC and upon the recommendation of U.S. Magistrate Judge Susan Paradise Baxter, who ruled against Fortitude in U.S. District Court in Erie on Feb. 10.

Baxter is next due to review a request for default that the SEC filed on Tuesday against Thomas J. Parilla, the CEO of the now-defunct Fortitude, formerly at 1001 State St.

The SEC filed the motion for default against Parilla for the same reason it filed one against Fortitude — because the defendants failed to properly respond to the suit the SEC filed against them on Feb. 29, 2016.

Fortitude never filed a response. Parilla, representing himself, filed a five-page motion in April asking to dismiss the case. The motion was in the form of a letter rather than the proper format for civil filings, and the SEC said the motion was without "any cognizable argument."

Baxter in December ordered Parilla to file a proper motion to dismiss by Jan. 13. He did not, which led the SEC to ask for a default judgment.

In granting the default judgment against Fortitude, Rothstein permanently enjoined the company from violating SEC rules against providing false and misleading statements.


The SEC wants Parilla fined and banned from participating in the sale of penny stock, which typically sells for less than $1 a share. Parilla said in his dismissal motion that he is a victim and did nothing wrong.

He could not be reached for comment on Friday. A person who answered the phone at what had been Parilla's Erie residence said he had moved to New Mexico.

The SEC is claiming Parilla artificially inflated, or pumped, the value of Fortitude's penny stock so he could sell it, or dump it, to make money.

The SEC is claiming the scheme involved Fortitude making false statements about its purported entry into the legal marijuana industry in Colorado three years ago. Fortitude claimed its portfolio included a purported marijuana vaporizer called "VaporVites," according to court records.

Penny stocks are not listed on the New York Stock Exchange or other major exchanges, but are traded via electronic services such as the Over-The-Counter bulletin board. The stocks are considered highly speculative and volatile, which can lead to big gains and losses.