III. GALLAGHER’S PDPR SCALPING SCHEME 57. Gallagher made approximately $116,000 in profits by engaging in a scheme to scalp shares of Marathon Group Corp., (“PDPR”), which he traded between February 1, 2021 and March 12, 2021. Gallagher’s scalping of PDPR is also typical of his scalping in other securities listed in Attachment A. 58. PDPR, f/k/a Pediatrics Prosthetics, Inc., is a Wyoming corporation headquartered in Waterbury, Connecticut. PDPR’s securities are not registered with the Commission. PDPR’s common stock was quoted and traded on OTC Link under the ticker symbol PDPR, until the Commission suspended trading in its securities on February 19, 2021. 59. According to its most recent press release, dated September 5, 2019, PDPR was 3 Once a trading suspension ends, quoting and trading may resume in the “grey market” or on non-exchange venues, such as OTC Link’s Expert Market tier, which limits the publication of unsolicited quotes to broker-dealers rather than to the general public. 15
Case 1:21-cv-08739 Document 1 Filed 10/26/21 Page 16 of 31 “engaged in web property development” and, through a subsidiary, had just entered the cannabis industry with three new products for people and pets. PDPR’s most recent quarterly financial information submitted to OTC Markets, for the period ending June 30, 2019, was posted in August 2019. Since 2001, the company changed its name three times, adopting its current name in 2011. 60. On February 1, 2021, Gallagher sent a DM to a Twitter account: “pdpr right?” That day Gallagher bought approximately 21 million shares of PDPR for prices between $0.0009 and $0.0013 per share. He also sold one million shares of PDPR at $0.0015. 61. On February 2, 2021, Gallagher bought another 34.5 million shares of PDPR for prices between $0.0012 and $0.0017 per share. 62. On February 3, 2021, Gallagher sent several DMs to select Twitter associates, privately advising them to load up on PDPR in the morning. These private messages included: “pdpr keep that under wraps” and “PDPR will be good today. id suggest go big. no noise out loud yet. between us.” 63. That day, Gallagher also began sending at least eight buy tweets to his followers and public viewers touting PDPR, including, for example, “Great market day! For all those that say @AlexDeLarge6553 pumps and dumps can kiss my ass! $pdpr up 164% 100% after alert!” and “$PDPR! MY NEW #1 GET IT BEFORE CLOSE!! . . . ”. Gallagher bought 1 million shares of PDPR but sold over 8 million shares of PDPR while tweeting buy recommendations that day. 64. On February 4, 2021, Gallagher sent approximately thirteen more public tweets touting PDPR, including: “LOOK AT $PDPR ALERTED EARLY YESTERDAY!! NO PUMP AND DUMP HERE!” That day, despite his public tweets assuring his followers and readers that 16
Case 1:21-cv-08739 Document 1 Filed 10/26/21 Page 17 of 31 he was not engaged in a pump and dump, Gallagher in fact sold more than 6.6 million of his PDPR shares at prices ranging from $0.0038 to $0.0043 per share, generating profits of approximately $17,700.00. 65. Gallagher knew these representations were false and misleading, as they misrepresented his own trading activity. 66. Again, Gallagher’s buy recommendations to his Twitter followers and viewers were clearly material, as evidenced by the responses of certain followers to one of his February 4, 2021 tweets to buy PDPR, which included the following: (1) “Im in”; (2)“I’m in ;” and (3) “I was a newbie a few months ago, but u were one of the first stock related profiles I followed.” 67. On February 5, 2021, Gallagher continued to tout PDPR with at least seven more tweets, including, “IF YOU SELL $PDPR YOUR DUMB!” and “$PDPR READ-BUY=GET RICH!!”. That day, Gallagher sold approximately 24.3 million shares of PDPR at prices ranging from $0.0044 to $0.0054 per share, generating profits of approximately $89,000. 68. Gallagher continued to tout PDPR on Twitter from February 6 through February 11, 2021, such as, “$pdpr is great and one of my favs long holds ill be adding all dips!” (“dips is understood to mean a momentary decline in price per share) and “. . . $pdpr alerts fire!!” while selling approximately 3.8 million more shares of PDPR on February 9, 10 and 12, 2021 at prices ranging from $0.0030 to $0.0042 per share, generating profits of approximately $8,700. 69. On February 18, 2021, the Commission announced the temporarily suspension of trading in PDPR securities “because of questions regarding the accuracy and adequacy of information in the marketplace about the Company and the market for its securities. Since late January 2021, PDPR’s share price and trading volume have increased in the absence of any 17
Case 1:21-cv-08739 Document 1 Filed 10/26/21 Page 18 of 31 publicly available news or current information from the Company, and certain social media accounts may be engaged in a coordinated attempt to artificially influence PDPR’s share price.” 70. After the Commission’s trading suspension ended on March 4, 2021, the company’s common stock started trading on OTC Link’s Expert Market. The company has a “Dark or Defunct” and skull-and-crossbones “Caveat Emptor” designation on the OTC Markets website. After the trading suspension was lifted, Gallagher sold his remaining shares of PDPR at prices that reduced his overall profits from this scheme to approximately $116,000.
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