Fortitude Group, Inc. (FRTD)

[Slojab]

Update of Parilla's troubles with the SEC.

Courtesy of Janice Shell.

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=122242830

Erie businessman says SEC claims are groundless

By Ed Palattella
814-870-1813
ETNpalattella
Erie Times-News

April 20, 2016 05:46 AM

ERIE, Pa. -- More than a month ago, in a case connected to legalization of marijuana in Colorado, the Securities and Exchange Commission sued an Erie businessman over claims he artificially boosted the value of his company's penny stock.

In his first response to the suit, Thomas J. Parilla, chief executive of the former Fortitude Group Inc., said he did nothing wrong and wants the case dismissed. Parilla said he is the victim.

"There's nothing to it," Parilla said. "In the end, it will have nothing to do with me, other than I had fraud committed against me."

He said he did nothing to pump up the stock's value so he could sell it, or dump it, to make money.

I didn't make a nickel off this," Parilla said. "They cannot say I was running any kind of pump-and-dump."

The SEC on Feb. 29 sued Parilla and Fortitude in U.S. District Court in Erie. Fortitude, which Parilla said is defunct, was at 1001 State St.

The SEC is alleging Fortitude and Parilla falsely inflated Fortitude's "penny stock" by issuing false news releases about Fortitude's involvement in the newly legalized marijuana industry in Colorado in 2014.

The SEC wants Fortitude and Parilla, 51, fined and wants Parilla banned from participating in any future offerings of penny stock, which typically trades for less than a dollar a share.

Parilla, 51, who is representing himself, on Monday filed a motion to dismiss all of the civil charges.

In the motion and an interview, Parilla blamed his problems on two men he said were associated with Fortitude -- Jehu Hand, Fortitude's legal counsel, and Michael Osborn, a trader. Both are being prosecuted in federal court elsewhere on fraud charges unrelated to Fortitude.

Parilla said Hand signed off on the Fortitude news releases, and that Osborn wrote the news releases and handled the contracts for the marijuana business in Colorado.

"I had no reason to believe there was fraud in any of those releases," Parilla said. "Maybe you can call me the dumbest guy on Earth, but you can't call me a criminal."

In the motion, Parilla wrote that he had offered to help the SEC in its investigation. He wrote that he is confident the evidence will show he had no reason to believe the news releases contained false information.

"Claiming Parilla knew about this before the Releases went out is simply a lie by the SEC," Parilla wrote. "They should issue a public apology when this is done, and the real truth emerges."

Osborn on Feb. 9 pleaded guilty in U.S. District Court in Denver to defrauding investors in another case. He pleaded guilty to wire fraud and money laundering and is awaiting sentencing, according to court records. His lawyer, Matthew Belcher, an assistant federal public defender in Denver, did not respond to a request for comment.

Hand was indicted in December in U.S. District Court in Boston on charges including conspiracy to commit securities fraud and wire fraud.

Hand is accused of being part of a "pump-and-dump" scheme, in which, according to the government, he helped artificially inflate the value of the stock of another company and then dumped the shares onto the market at the inflated price. The government described that company, Greenway, as a "microcap," whose stock often trades at pennies per share.

Hand is awaiting prosecution, according to court records. His lawyer, William H. Connolly, of Boston, did not respond to a request for comment.

In the case against Parilla, the SEC is claiming he and Fortitude said in news releases in 2014 that Fortitude had "successful marijuana-related partnerships and operations."

In reality, according to the SEC, "at no time did Fortitude formally operate in the marijuana space or have the requisite licensure, funding or other corporate infrastructure to run a successful marijuana-related business."


ED PALATTELLA can be reached at 870-1813 or by e-mail. Follow him on Twitter at twitter.com/ETNpalattella.

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