2022-10-28 20:30 ET - Street Wire
See Street Wire (U-*SEC) U S Securities and Exchange Commission
by Mike Caswell
Bradley Moynes, a Vancouver man accused by the U.S. Securities and Exchange Commission of running a $6-million pump-and-dump on the OTC Markets, denies that he did anything wrong. (All figures are in U.S. dollars.) The SEC says that Mr. Moynes unloaded millions of shares in a cryptocurrency listing during a paid promotion that boosted the stock to 96 cents. He had held the stock through nominee accounts, according to the SEC.
The denials from Mr. Moynes are contained in an answer that he filed in federal court in Boston on Friday, Oct. 28. The document is 11 pages long, but it contains few details. In response to most of the SEC's allegations, Mr. Moynes flatly denies any wrongdoing. He does admit to many routine things, such as the fact that he is 51 years old and lives in British Columbia.
One of Mr. Moynes's more interesting admissions is that he was a client of West Vancouver's Frederick Sharp. The SEC separately charged Mr. Sharp, claiming that he ran a service that catered to those looking to run a stock market scheme. He and his group provided encrypted communications and a network of offshore companies that penny stock promoters used in multiple pump-and-dump schemes. His group facilitated the sale of about $1-billion worth of stock, according to the SEC. Mr. Sharp did not answer the case, and on May 12, 2022, the SEC won a permanent ban and a $52.9-million judgment.
The SEC said that Mr. Sharp helped Mr. Moynes secretly hold shares. By using Mr. Sharp's services, Mr. Moynes was able to fraudulently conceal that he was selling shares of two companies when he was serving as the president of those companies, the SEC claimed. While Mr. Moynes admits to becoming one of Mr. Sharp's clients in 2014, he denies that he used any illicit services or that there was anything illegal about Mr. Sharp's operation.
Mr. Moynes also denies that he had any association with Luis Carrillo, a known securities violator who allegedly boosted Mr. Moynes's company through a boiler room in Colombia. The SEC said that the boiler room encouraged investors to buy while Mr. Moynes issued news releases about new business ventures. As with the other portions of his answer, Mr. Moynes provides no details, simply denying that he did anything wrong.
In legal terms, Mr. Moynes says that the SEC has failed to state a claim, lacks jurisdiction and filed the case too late. He also says that he acted in good faith and did not intend to deceive, mislead or defraud investors, among other things. He asks that the case be dismissed, and demands a trial by jury.
The denials from Mr. Moynes come four months after the SEC charged him, filing a civil complaint on June 27, 2022, in the District of Massachusetts. The case arose in part from the promotion of an OTC Markets listing called Digatrade Financial Corp., which called itself a "global digital asset exchange and blockchain development services company." The SEC claimed that Mr. Moynes set himself up as the hidden owner of a large block of shares in early 2014. The stock, supposedly issued to settle old debts, was held through nominee entities, according to the complaint.
As part of the scheme, Mr. Moynes directed manipulative trades designed to support and inflate the price of Digatrade, the SEC claimed. According to the complaint, he had traders purchase the stock at the end of the day, a practice known as marking the close. In one example provided by the SEC, Mr. Moynes's trades boosted the stock to a 57-cent close, up from 25 cents the prior day. The trading came alongside activity by the Colombian boiler room operation, the SEC said.
The scheme, as set out by the SEC, began to attract regulatory attention in December, 2016, when FINRA (the Financial Industry Regulatory Authority) questioned Mr. Moynes about Digatrade's volume and price increases. In particular, FINRA noted that the activity accompanied news releases that Mr. Moynes had issued as president. According to the SEC, Mr. Moynes told FINRA that he did not trade the stock and did not know anyone who had.
About a month later, Mr. Moynes found himself needing more shares to carry on the scheme, the SEC said. According to the complaint, he arranged the issuance of eight million shares in a purported shares-for-debt deal. Once again, he placed the shares in nominee accounts and unloaded the stock on the market, the SEC said. He repeated this pattern many times over 2018, according to the SEC.
In all, the trading generated $5.9-million, the SEC said. Of that, Mr. Moynes and companies associated with him received $1.5-million, according to the complaint. The SEC further claimed that Mr. Moynes realized $256,000 in gains through a scheme with another stock, Formcap Corp., which was supposedly an oil and gas explorer. That stock no longer trades.
The SEC is seeking a permanent ban, disgorgement of gains and an appropriate fine. Digatrade, which hit a 96-cent high during the scheme, was last at 0.01 cent.
Prior to his present trouble, Mr. Moynes worked in the brokerage industry. He was at Georgia Pacific Securities Corp. until 2000, when he began work at a predecessor company to Digatrade.
