U.S. Government charges Andy Defrancesco with Securities Fraud

This story has been updated

Canadian small cap financier Andy Defrancesco has been accused by the U.S. stock market regulator of securities fraud for his role in leading a pump and dump scheme of Cool Holdings ($AWSM). The SEC filed its complaint in the Southern District of New York on Friday, January 6 and also named his ex-wife Catherine Defrancesco and his long time executive assistant Nikola Faukovic for aiding him in secret payoffs for stock promotions and using nominee accounts to hide Andy Defrancesco’s actual ownership of the Apple reseller phone business. Cool Holdings CEO and CFO are also defendants in the securities fraud suit. None of the defendants responded if they plan to fight the case or settle and agree to the SEC demands.

The SEC’s case focuses on trading in 2018-2019, false promotional campaigns, and SEC stock ownership forms that didn’t report the correct percentage of stock ownership. The complaint list two additional people who aided Andy Defrancesco in his stock violations. A person who worked for him at Delavaco Group called ‘affiliate A’ and a stock promoter who bills himself as an IR consultant or analyst.

The government doesn’t name the protomer who allegedly published false information about the health of Cool Holdings in September 2018 but it’s not hard to fact check that person is James Stafford who owns oilprice.com and Advanced Media Solutions Ltd. The article title, “Small NASDAQ Company Just Got a Huge $900 million Opportunity From Apple”, can be found at safeheaven.com and has a disclaimer that ties back to Advance Media Solutions. James Stafford’s work is often seen under other names and few know were the man actually resides. The Globe and Mail was first to report on his alleged ties to Cool Holdings and Defrancesco in a story from February 2019 called “How two Canadian financiers took an obscure Apple reseller for a wild ride”.

It only took the SEC four years to use the road map Milstead’s detailed reporting laid out against Defrancesco and Stafford. Meanwhile Defrancesco or his affiliates appear to have been using Cool Holdings and all its future version of the company to the benefit of themselves instead of building a company that benefits main street shareholders.

In 2018 I had been leaked a series of internal documents from a questionable New York-based broker dealer called Laidlaw & Co. As a result I reported on a series of deals Laidlaw had been running for Barry Honig. One of those deals was Cool Holdings and in September 2018 I had even warned sources close to Laidlaw believed the firm was currently helping Honig and associates run a pump of Cool Holdings. It wasn’t till 2019, when I was leaked Andy Defrancesco’s text messages with a broker at Laidlaw did I see in his own writing that Defrancesco was working with Barry Honig on Cool Holdings.

In September 2018 Barry Honig was finally charged by the SEC for running pump and dump schemes in over forty companies but only three were detailed in the SEC case against Honig and Cool Holdings wasn’t one of them. Honig has since agreed to a penny stock ban but is still litigating how much of a fine and restitution he will pay the SEC for his schemes.

Meanwhile James Stafford has been busy. He is currently a named defendant in a defamation and harassment suit filed in Canadian courts by a hedge fund and it’s owner Moaz Kassam. Andy Defrancesco’s right hand man Andrew Rudensky is also a defendant who is accused of working with a Cannabis twitter analyst named Robert Doxtator, who goes by the handle @BettingBruiser, to smear Anson Funds and it’s leader reputation as investment professionals. The lawsuit says Stafford is retaliating for others who pay him because Anson Funds had called out a company Defrancesco had invested in called Facedrive. Kassam is suing the trio for $100 million and Andy Defrancesco is believed to be paying for Robert Doxtator’s legal defense. Doxtator’s Canadian attorney Joe Goria is an attorney Defrancesco regularly uses. The legal theory is Stafford, Rudensky, and Robert Lee Doxtator have been working together recently to discredit short sellers that Andy Defrancesco perceives as his enemies or opponents in a stock deals. The lawsuit says Stafford’s business are registered in Wales, England, the BVI’s and he has an office in Mexico.

Stafford did not respond to a request for comment at an email address he uses at oilprice.com. Rudensky when reached at his home hung up on me. I had tried to ask Rudensky if he is ‘affiliate A’ in the SEC lawsuit or if he is cooperating with the SEC.

Additionally, Stafford is believed to have led promotional campaigns to discredit short seller funds in another company called ReconAfrica. Stafford’s online activities got so bad one of the partners of Viceroy Research, who published a short reports on the problems at Reco, had to make a compliant about Stafford to the Royal Mounted Canadian Police who followed up with an interview. The legal theory is Stafford, Rudensky, and Robert Lee Doxtator have been working together recently to discredit journalist or short sellers that Andy Defrancesco perceives as his enemies or opponents in a stock deal. Defrancesco is not yet named as a defendant in the Anson Funds lawsuit.

It’s unclear why the SEC didn’t name Stafford as a defendant or if he is cooperating with the U.S. authorities against Defrancesco.

Last year Andy Defrancesco suddenly resigned as CEO and Chairman of the board of his beloved Sol Global Investments – a public company he used to invest in cannabis companies or other start ups like the electric vehicle market. Sol Global is listed on the Canadian Stock Exchange ($SOL.c) and trades on the OTC in the U.S. under ticker $SOLCF. Two of Sol’s subsidiaries House of Lithium and Revolution Brands International are holders of the current version of Cool Holdings, called Simply, Inc., according to bankruptcy court filings in Utah.

On April 25th 2022 Sol Global issued a press release saying, “Effective today, SOL Global’s founder, Andy DeFrancesco, has ceased to be the Chief Executive Officer and a director of the Company, but will continue working with management to transition responsibilities, including investment decisions related to the management of the portfolio companies.”

Replacing Andy to lead Sol Global is man named Kevin Taylor, who is a known associate of Andy Defrancesco, according to a person who has worked with and invested with Defrancesco. Taylor along with Sol Global are listed as creditors in the bankruptcy of Cool Holdings/Simply, Inc. So are two of the men charged with Andy Defrancesco in the SEC case. In fact, according to the bankruptcy docket, on October 4, 2022 four of Cool Holdings executes and directors from 2018 told the court they knew the SEC was about to bring a case and were asking the judge and bankruptcy trustee to release a stay or hold on Cool Holdings directors and officers insurance so they could use it to defend themselves against the government. At first the trustee said no and then within a month agreed. The bankruptcy trustee also asked the court in November of 2022 to waive his privilege because the SEC had asked him to turn over all internal communication from 2018-2019 along with contracts relating to Apple Inc. and any drafts of stock promotions or press releases.

The Globe and Mail was first to report the SEC had sent subpoenas and started investigating Cool Holdings in the spring of 2019. In fact it was Globe reporter David Milstead who was first to get Defrancesco’s personal lawyer at Quinn Emanuel to admit they had gotten a SEC subpoena asking for information about Andy. Then the case appeared to go cold in 2020 and 2021. It wasn’t till the sudden resignation from Sol Global in April did the rumors start again about Andy Defrancesco being under investigation.

Last year I began emailing Andy and his lawyer Alex Spiro asking if Andy had signed a tolling agreement with a U.S. government agency…this would included the IRS, DOJ or SEC. A tolling agreement is usually for delayed prosecution or can he used if people are cooperating with the government but expect be charged under seal. For the first time in reporting on Defrancesco since 2018 he was silent and didn’t deny the possibility of a government investigation. I had heard from people who had been interviewed about Andy by U.S. government agencies, they thought a wire fraud or money laundering case was coming against Andy Defrancesco. As to my knowledge and court record searches in Canada and the U.S. Andy Defrancesco has never been charged criminally.

But both the Defrancesco’s are familiar with fighting civil fraud or misconduct cases over their investments in public companies. The SEC’s complaint this month now opens up possible litigation for other civil or criminal pump and dump cases and shows the path Defrancesco has allegedly used to pay off stock promoters to exaggerate a company’s finances for a pump of the stock and how he hides his true ownership and control of a company.

Catherine Defrancesco is currently fighting a securities fraud suit with Barry Honig over trading as an undisclosed affiliate group in crypto company Riot Blockchain ($RIOT). The suit, filed by $RIOT shareholders, says she was an 11%+ beneficial owner of shares in Riot through multiple entities: DSB Capital, Ltd., DeFrancesco Motorsports, Inc., Delavalco Holdings, Inc., Marcandy Investments Corp., and Namaste Gorgie, Inc. The SEC complaint says Andrew Defrancesco created and controlled four of those five entities and Catherine, who has no known stock investing experience, was just a nominee or president in name only, for her husband turned ex-husband. Shareholders in the Riot lawsuit are currently waiting for a judge to decided if the case will survive a motion to dismiss of its third amended complaint. It will be interesting to watch if the plaintiffs now add Andrew Defrancesco as a named defendant.

This summer Andrew was sued by a wealthy man from Georgia for not giving him the stock he had purchased in 2020 for $200,000 in a deal involving CBD company Heavenly RX which was a subsidiary of Sol Global Investments. The plaintiff, Kadirali Chunara, also sued Sol Global Investments and its CFO Peter Liabotis.

The company and Liabotis have accepted service of the suit but the court docket shows Andy Defrancesco is still dodging service. A women in Sol Global’s South Florida office told the processes server Andy lives in Canada now. Last year the double-digit million dollar home of Andy and Catherine Defrancesco was put up for sale. This summer I was told Andy had fled the U.S. and was hiding out in his lake house in Canada. He has also been regularly seen hopping around the Bay St. scene in Toronto. It’s always been unclear where Andy Defrancesco had citizenship. Some media profiles said he was a Bahamas resident and he had been working in the U.S. off a work visa. The SEC complaint says Andy Defrancesco is a resident of Miami Beach, Florida but it’s still unclear which country he has citizenship in. Catherine is listed as having residences in Miami Beach, Toronto, and Gstaad, Switzerland.

The most recent example of allegedly illegal stock deals is a lawsuit filed by a shareholder in Cool Holding-Simply Inc who accused Sol Global Investments of short-swing sales while lending the company money via PIPE deals. The compliant says Sol Global and its affiliate companies made $1.9 million of gains it shouldn’t have and securities law says if true that money has to go back to the company. After Simply Inc filed chapter 7 the trustee took over the lawsuit and amended the damages to $1 million. In November when Defrancesco likely knew he was going to be charged by the SEC, Sol Global suddenly agreed to settle with Simply Inc. and court records show they will pay the estate of Simply Inc. $500,000. Ironically, at least two of the men in the Defrancesco SEC complaint are also listed currently as creditors of Simply Inc and might get some of that settlement.

The SEC says in its complaint they want to ban Andy Defrancesco from ever being an officer or director of a public company and think he and Catherine made around $8 million off the alleged Cool Holdings stock manipulation. According to the court docket summons were issued for Andy and Catherine at the same address in Miami Beach.

UPDATE 2.10.2023: Andy and Catherine Defrancesco are avoiding service according to a letter filed by the SEC with the judge. The regulator said the Defrancescos known attorney told them they don’t represent them any more. As a result the SEC is going to have find a physical address to serve Andy and Catherine. The SEC also stated this will be a cross-boarder case and at least 15 witnesses will be called to testify.


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