A. Elite Stock Research’s Boiler Room Operations
65. Elite Stock Research was incorporated in August 2013, and during the relevant
period, it operated out of its headquarters in Plainview, New York. Vassallo is the chief
executive officer of Elite Stock Research, and he controls its operations. Vassallo has trading
authority over the Elite Stock Research brokerage accounts and signatory authority over Elite
Stock Research’s bank account. The Orchestrator Defendants, including Lee, paid Vassallo in
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cash for his services. Vassallo also received proceeds from the sale of securities promoted by the
firm. Between January 2014 and January 2016, Vassallo received more than $250,000 in checks
and direct withdrawals from Elite Stock Research’s bank account.
66. According to its website, Elite Stock Research provides investors with “top
quality trade recommendations and . . . research that you can trust.” However, Elite Stock
Research operated as a boiler room, employing numerous individuals and using 19 different
telephone lines, to artificially increase the price of certain microcap securities via manipulative
trading and strong-arm, fraudulent promotional campaigns (“pump” or “pumping”). From 2014
until at least 2015, Elite Stock Research pumped at least two securities, CESX and HECC,
through aggressive promotional activity and executed hundreds of manipulative trades, including
matched and wash trades, to artificially inflate the price of the securities that Elite Stock
Research was paid to promote. During this time period, the firm received more than $1 million
in illegal trading profits.
67. Elite Stock Research employed Erik Matz, Hardy, Heepke, Verderosa, Ramirez,
and Antos as “sales” personnel to aggressively promote securities as part of the fraudulent
schemes alleged in this Complaint. Between 2014 and 2015, these Defendants called numerous
victims promoting at least CESX and HECC in furtherance of the pump-and-dump schemes and
employed many of the strong-arm, fraudulent promotional tactics alleged in this Complaint.
68. In addition, Heepke engaged in at least one wash trade of CESX, and Vassallo
executed at least 17 matched trades with Elite Stock Research’s victims in furtherance of the
pump-and-dump schemes alleged in this Complaint.
69. Between 2014 and 2015, Elite Stock Research paid Erik Matz, Hardy, Heepke,
Verderosa, Ramirez, and Antos more than $448,000 in salary and commissions.
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70. At all times relevant to this Complaint, Elite Stock Research, Erik Matz, Hardy,
Heepke, Vassallo, Verderosa, Ramirez, and Antos were not registered in any capacity with the
Commission. Nonetheless, Erik Matz, Hardy, Heepke, Vassallo, Verderosa, Ramirez, and Antos
were acting as brokers engaged in the business of effecting transactions in securities for the
accounts of others. At all relevant times, they directly solicited potential investors to purchase
securities, provided advice concerning the value of such securities, the advisability of investing
in these securities, and received transaction-based compensation from the promotion of such
securities.
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