Example 2: Digatrade Financial Corp. 41. During the Relevant Period, Bradley J. Moynes4 was the Chief Executive Officer and Chairman of Digatrade Financial Corp. (OTC: DIGAF) (“Digatrade”), a publicly traded company based in Vancouver, British Columbia, Canada. 42. Between about September 2014 and April 2016, Moynes engaged in a fraudulent scheme to sell Digatrade securities into the public markets while concealing his control of those shares through nominee companies. Moynes’ scheme used the services of Frederick Sharp and his employees to sell his Digatrade shares illegally.5 Carrillo became involved in Moynes’ scheme in mid-2016. In July and August 2016, Moynes took steps to re-establish his control over the public float of Digatrade by decreasing the number of Digatrade’s shares and then causing Digatrade to issue new, and purportedly unrestricted, shares to nominee entities that Moynes and Carrillo could control. 43. By the end of 2016, Moynes, Carrillo and their associates (the “Digatrade Control Group”) controlled approximately 97% of Digatrade’s public float and Moynes also controlled a significant block of Digatrade’s restricted shares. The Digatrade Control Group owned their shares of the public float through various overseas brokerage accounts they controlled through their associates. The Digatrade Control Group then began to promote and sell the Digatrade
4 The Commission charged and obtained judgments against Moynes and Digatrade in a separate case alleging that they engaged in a deceptive scheme to hide their sales of Digatrade stock to unsuspecting retail investors. Without admitting or denying the allegations of the Commission's complaint, Moynes and Digatrade consented to the entry of final judgments enjoining them from violating the securities laws. The final judgments also imposed penny stock bars against Moynes and Digatrade and imposed an officer and director bar, disgorgement, and a civil penalty against Moynes. See SEC v. Moynes, et al., No. 1:22- cv-11006 (D. Mass. judgments entered Mar. 8, 2023). 5 Sharp and his associates are defendants in a Commission action alleging that they facilitated unlawful stock sales to retail investors for many different Control Persons. See SEC v. Sharp et al., No. 1:21-cv11276 (D. Mass. Filed Aug. 5, 2021). Case 1:23-cv-11598 Document 1 Filed 07/17/23 Page 12 of 25 13 shares they controlled. 44. Carrillo hired the Medellin Room to solicit investors in a promotional campaign that started on November 1, 2016. In the two months prior to the promotion, trading in Digatrade was sparse. However, in the first two days of the Digatrade promotion, the price and volume of Digatrade soared. 45. In particular, over two days, November 1 and 2, 2016, brokerage accounts controlled by the Digatrade Control Group sold approximately 4.5 million shares of Digatrade (over 50% of the company’s public float), generating approximately $2.3 million in trading proceeds. Despite that heavy selling, Digatrade’s stock price rose from a closing price of $0.13 per share on October 31, 2016 to a closing price of $0.59 per share on November 1, and peaked at $0.96 per share on November 14, 2016, as reflected in the chart below. - 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 $- $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 3-Oct-16 3-Nov-16 3-Dec-16 3-Jan-17 3-Feb-17 3-Mar-17 3-Apr-17 3-May-17 Digatrade Financial Corp (DIGAF) - Price and Volume Volume Close Case 1:23-cv-11598 Document 1 Filed 07/17/23 Page 13 of 25 14 46. Through his firm’s proprietary trading account, Anglim initiated quoting on Digatrade on the first day of the Digatrade Control Group’s promotion. Trading records show that Anglim’s firm was leading the bid price increases for Digatrade shares that day. In other words, Anglim offered to buy Digatrade shares in the market at increasing prices throughout the day on November 1, 2016. 47. Over 8.2 million shares of Digatrade traded in the market during November 1-2, 2016 compared to less than 32,000 shares for the whole month of October. Over those two days, the Digatrade Control Group sold approximately 4.5 million shares of Digatrade and Anglim facilitated their liquidation by buying and selling approximately 3 million shares of Digatrade using his firm’s market maker trading account. 48. From November 1, 2016 through May 1, 2017, the period in which Anglim was trading in Digatrade using his firm’s market maker trading account, the Digatrade Control Group sold approximately 12.3 million shares of Digatrade for approximately $3.4 million in proceeds. 49. Anglim’s firm’s market maker trading account bought and sold approximately 11.2 million shares of Digatrade between November 2016 and May 2017 and the firm’s net trading profit totaled $123,862, of which $61,931 was paid to Anglim in commissions. 50. Anglim also traded in Digatrade in his personal brokerage account. On or about December 6, 2016, after the initial promotion, Digatrade’s price dropped to a low of $0.28 a share. That day, Anglim bought on the dip in price by purchasing 98,000 shares of Digatrade at an average price of $0.29 per share in his personal brokerage account. 51. On the same day, December 6, 2016, Anglim continued to trade Digatrade for the Digatrade Control Group by buying 403,714 shares and selling 392,850 shares in his firm’s proprietary trading account. By the end of that day, the price had increased and Anglim switched Case 1:23-cv-11598 Document 1 Filed 07/17/23 Page 14 of 25 15 to selling Digatrade shares in his personal brokerage account. That day, he sold 22,600 Digatrade shares at an average price of $0.37 per share, resulting in a single day gain of 29% per share. 52. The total trading volume for Digatrade on December 6 amounted to 1,364,894 total shares, of which Anglim’s market making and personal trading accounted for 917,164 shares, or approximately 67% of total volume. Digatrade shares closed at $0.40 on December 6, 2016, up 25% from the prior day’s close. 53. In his personal brokerage account, Anglim sold most of the rest of his shares of Digatrade over the next week and by the end of December 2016, Anglim had made a total profit of $14,222 on his initial $28,473 purchase of Digatrade shares. Anglim’s Digatrade commissions and personal trading profits thus totaled $76,153.