CNBC Investigates Barry Honig trading in Bitcoin Company $RIOT

We witnessed somewhat of a reporting miracle today! CNBC TV journalist Michelle Caruso-Cabrera and her producer Scott Zamost took on an on-the-ground investigation into the questionable activities of micrcocap investor Barry C. Honig and got out from behind the desk to do some real reporting.

In 2016, I was first to expose that Honig and a fellow investor John O’Rourke were named in an SEC investigative subpoena regarding trading in MGT Capital. My reporting at trade publication Growth Capitalist explained the SEC could be looking at how a group of investors, including Honig, trade as a group without disclosing their affiliation. The investigation appeared to also be looking at stock promotion and how it was disclosed along with the timing of public announcements as to who owns how much of the stock. Today we see CNBC try to take on reporting with a similar fact pattern through Honig’s investing in a company called Riot Blockchain ($RIOT).

Riot made the rounds of financial news when its stock flew up in December from $8 to over $40 after a simple name change to a company in the Bitcoin business. CNBC reports “Until October, its name was Bioptix, and it was known for having a veterinary products patent and developing new ways to test for disease.” SEC filings show that Honig was considered an insider in the company because he owned more than 10 percent of the stock. John O’Rourke was gifted shares when he suddenly became the company CEO after Honig pulled an activist move that magically put O’Rourke in charge of the company and axed previous board members. Honig does a bridge loan, gets cheap cashless warrants and boom sells the stock on its high while retail investors pile in. Then the stock tanks. This type of investing is a rinse and repeat move for Team Honig and mirrors what we saw in MGT Capital.

CNBC actually did some good question-asking-reporting here although they didn’t get a lot of truthful detailed answers. Caruso-Cabrera went to Honig’s Boca Raton office at 555 S. Federal Highway Suite 450 after she couldn’t get anyone at the company to do an interview. We see Caruso-Cabrera enter Honig’s office and find none other than John O’Rourke there. O’Rourke comically runs away from her and almost slams her fingers in the door but then comes back out to promise an ‘off camera’ interview. Honig and O’Rourke both deny that they “work together” but then Honig later admits O’Rourke did at one time have an office in his office. If the CEO of the company had his office in a major shareholders office that claims not to control the company that doesn’t look good. You can read CNBC’s print story and see on-camera footage here.

A lot of the CNBC coverage focuses on if O’Rourke currently works out of Honig’s office. Their reporting indirectly tries to point out both of these men could be lying. If CNBC wanted to drive home this point they also could have done some SEC filing research, like I did. where John O’Rourke office address is Honig’s office address in this filing from December 2016.

I have previously reported O’Rourke has worked out of Honig’s office after I interviewed a person who saw him working there. Which is just odd he goes and denies it to CNBC. I reached out to O’Rourke’s attorney Nick Morgan at Paul Hasting this morning to ask what CNBC didn’t clarify. When did O’Rourke stop working out of Honig’s office and what is his new office address? Attorney Morgan said he would get back to me but as of press time I have no answer. Honig was also contacted through his Attorney Charles Harder and asked when O’Rourke stopped working out of his office. At press time Attorney Harder did not respond.

While we really enjoyed the gotcha moments Caruso-Cabrera captured on camera, it was disappointing not to see CNBC mention the elephant in the room. Honig and O’Rourke are named in an SEC subpoena for their role trading and investing in MGT Capital. On January 31st the WSJ did a similar story on Riot looking at Honig and his role in the company which included their reporter Ianthe Dugan asking Honig flat out about the SEC subpoena. The WSJ reported “Mr. Honig said that he hasn’t been contacted by the SEC and doesn’t believe he is a target. “I am 120% not worried,” he said.” A government agency investigating securities violations usually doesn’t knock on the subjects door and let them know they are gathering evidence against them until they have a case built. So Honig’s public denial doesn’t carry much weight in my book.

There is also something else alarming in the CNBC story. Honig’s longtime deal attorney Harvey Kesner, who is now a named partner at Sichenzia Ross Ference Kesner LLP, was reached on the phone by CNBC and said “he didn’t know anything about Riot Blockchain and Barry Honig.” And then he hung up on them. What??? Kesner is the named deal lawyer on multiple Honig investments. He is the attorney I have called multiple times, and has responded for Honig on deal questions and his law firm is on SEC filings for Riot. On top of all that CNBC figured out Kesner also owns an investing company called Paradox Capital Partners, which I previously reported on, who also owns RIOT stock. I emailed Kesner this morning to give him a chance to clarify his comment but so far he is radio silent.

I have to wonder if Kesner is trying to finally distance him self from Honig because of questions about the timing of Honig’s self reporting of RIOT stock ownership. You see since Honig went above owning 10% of the stock (he reported he owned 11%) ,and then sold to own about 2%. if he did that selling within 6 months he is subject to the rules that prevent sell-then purchase or vice versa within six months. Honig should have filed a Form 3 which I can’t seem to find in SEC filings. And all of this could be a section 16(b) violation of the Exchange Act. Which creates the opportunity for the company (RIOT) to sue Honig for any profits he made from a short swing and the profits go back to the company. But I guess if your friend John O’Rourke is running the company he is not going to file that lawsuit! And we don’t know when Honig officially sold because of his lack of timely reporting. Something we saw him also do with MGT Capital.

Here is an example of a lawsuit for a 16(b) violation with a company called WPCS. A stock Honig and O’Rourke also invested in.

John O’Rourke told Benzinga after the first CNBC video aired that their coverage was Garbage and a Hit Piece. That means Michelle Caruso-Cabrera is on the right track. Riot saw a $5 drop in its stock price today which is about a 34% decrease since the CNBC story aired. Ambulance chasing securities lawyers have also announced that they plan file a class action lawsuit for securities violations against RIOT.

Editor’s Note: Honig previously sued me for reporting he was named in an SEC subpoena. He dropped that litigation against me in January and I am here reporting again. Lawsuits are a pain and risk me having to disclose sources but they will never deter me from staying on the story. Donations to this free publication are greatly appreciated and always needed. Tips can be sent to .

Banned by SEC: Steven Muehler starts another advance fee scheme

A Southern California man named Steven J. Muehler is blatantly ignoring a ban from the equity crowding funding industry lobbed by the Securities and Exchange Commission last year. I am reporting exclusively for Growth Capitalist that Muehler is once again behind a scheme to bilk start-up CEOs out of their much needed cash with promises of helping them launch a successful mini-ipo offer and secure millions in investments. A promise now proven to be a fistful of lies.

Here is sample of my reporting at trade publication Growth Capitalist. It’s free to register to read the articles.

A California securities offering promoter who was the subject of the very first SEC enforcement action taken against a participant in the newly reformed Reg A market has been linked to a group of websites claiming to offer capital-hungry companies and their investors a soup-to-nuts money raising experience in exchange for cash fees and shares, despite lacking the necessary securities licenses to do so legally, and in seeming defiance of a recent ban imposed by the agency.

Steven J. Muehler, 41, a Marina Del Rey, Calif.-based financial consultant with a history of federal and state securities law violations that led him to be banned from the industry last June, has reconstituted his now four-year old scheme to create an “alternative securities market” for Reg A companies with a full suite of services including deal advisory, offering marketing and securities brokerage, proprietary investment by self-managed venture funds, and a listing market for secondary sales, an investigation by Growth Capitalist has found.

My editor and I took a month to investigate Muehler’s new scheme through painstaking document searches of corporate records and regulator filings to prove this fraud. Muehler’s new company is called Alta Vista Capital Markets or Alta Vista Private Client. He even started a fake alternative trading system called NanoCap Market that has claimed to be registered with the SEC but isn’t. This time around Muehler used his wife Claudia’s name on legal documents and convinced a LA man, who once was a registered investment adviser, Koorosh “Danny’ Rahimi to be the named CEO of his new company. Our reporting at Growth Capitalist shows how Muehler was controlling the company behind the scenes. To the point of even using Koorosh’s company email to speak with potential and existing clients.

After Muehler heard from some of his CEO clients that I was asking questions about the legitimacy of his business we saw him change the company website and take down claims of being registered or working on a broker dealer license. It took finding issuers he had sold his up-front fee scheme, to go on the record to prove how much Muehler was truly involved in the business. The phone interviews I had to make involved being first to tell excited CEOs that the Regulation A offering (mini-ipo) they had submitted to the SEC, which was supposed to help their business raise millions in needed capital, was done with a bad actor and there likely were not millions of dollars in AltaVista Venture Funds to invest in their offering. It was a sad reality for CEOs to hear the $10k they had given AltaVista was wasted.

AltaVista had even gone as far as filing initial Form D’s with the SEC to show potential clients there was a real fund but then didn’t list raising any money in the RegD offering. I was told by one CEO, after our reporting came out two weeks ago, that Muehler wasn’t that worried about his scheme being exposed by Growth Capitalist because the reporting is behind a paywall!

The SEC is fully aware of Muehler’s new scheme. I reported a whistleblower and an attorney, who works in the equity crowdfunding space, have altered the regulator. The regulator also acknowledged they read our 3-part investigative reporting. But with a new Trump regime of lax regulation it’s unclear how long the securities regulator will take to stop Muehler again. Given he hasn’t paid the $400k fine from the last enforcement action it appears it will take a criminal charge to curb this bad boy.

Which is why it is even more important for investigative journalist to be supported with your donations and subscriptions. If you think this reporting is informative please donate today. Because it’s doubtful we can count on our government agencies warning the market about fraud…that now falls mainly to financial journalist. Additionally, since it’s free to register now at Growth Capitalist I encourage you to do so right away. You will have a chance to read good insight into the equity crowdfunding and mini-ipo market.

Here it is: that MGT Capital SEC Subpoena

UPDATE: On September 15, 2016, MGT Capital received a subpoena from the Securities and Exchange Commission. The subpoena requested documents and communications between MGT and Barry Honig. It also sought documents and communications between MGT and eight other individuals and eleven entities associated with the individuals.

I have not confirmed with the SEC that Barry Honig is in fact the subject or target of any SEC investigation. No person at the SEC has ever informed me that the SEC is investigating Mr. Honig. The SEC, when called for comment, told me that they do not comment on ongoing investigations.

Original Text

MGT Capital was subject to a subpoena sent by a lawyer at the Securities and Exchange Commission named Katherine Bromberg who is senior counsel in the New York office of the division of enforcement. The Subpoena demanded a response by September 28, 2016. MGT’s stock had been on a soar after it was announced the company was going to merge with John McAfee’s private security company. MGT CEO Rob Ladd was forced to announce the receipt of the subpoena by the exchange the company listed on, the NYSE, and the stock started a slide. The NYSE latter delisted the company without explaining in writing what their reasons were and did not allow the issuance of millions of new shares that the company approved in a board of directors vote.

The company is now on the OTC pink sheets waiting for the top-tier of the OTC markets to approve their listing. John McAfee was eventually made a director of the company but the merger of his security assets isn’t completed yet. The company website says “MGT Capital Investments, Inc. is in the process of acquiring a diverse portfolio of cyber security technologies. With cyber security industry pioneer, John McAfee, at its helm…”

In September MGT CEO, Rob Ladd, who signs all SEC filings, said in a press release the company didn’t think the SEC subpoena questions were focused on ‘the company’. Latter that month I was first to report on some of the people named in the SEC subpoena for the trade publication I report for Growth Capitalist. I reported Barry Honig, Michael Brauser and Josh Silverman’s hedge fund as being subjects of the subpoena questions. I had interviewed an executive at the company who said they thought “the focus of the SEC subpoena was about Barry Honig and the people he invested with.” I then wrote an opinion piece at that Honig and friends were the subject of this subpoena.

Below is the subpoena for the reader to see and formulate their own opinions. This is the first time it is being made public. The name of the companies on page 7 are all owned by the names of the people on page 7-8. I was told by a person at the company all of these people invested with MGT Capital and you need a flow chart to show their interconnectedness. I have also researched other public filings and found these people have invested in the same equities in the past. Most of these people say they are passive investors and don’t know each other or don’t ‘invest together’. It’s my belief after a decade of proven investigative reporting and based on knowing how to read a SEC subpoena, along with interviews with people involved in the transaction and past investing transaction of Barry Honig, that the regulator is looking for evidence that these people traded as a group and therefore became beneficial owners of the stock. If you have beneficial ownership of a stock it affects when and how much you can sell your stock so investors, like the group here, often try to keep their public ownership of the stock below 10%. I think the regulator also wants to know if any of the investors, who except for Josh Silverman were not on the board of the company, had any influence in the McAfee merger or the paid stock promotion by Stock Beast. But the most interesting question is number 10.

All Documents and Communication concerning MGT’s acquisition of certain technology and assets of D-Vasive, as stated in MGT’s Form 8-K filed on May 9, 2016.

MGT had announced in its August proxy statement on page 23 that D-Vasive had had gotten a $850,000 bridge loan with convertible debt but didn’t disclose who did the bridge loan. John McAfee owns D-Vasive. I was told by a person at MGT that some of the names on the SEC subpoena had also done the bridge loan. If the merger had been approved, these people would have likely had D-Vasive stock warrants that would have became MGT stock and while the stock was flying high would have made a killing if they were able to sell. There are a lot of unanswered questions about that transaction and since D-Vasive is private they don’t have to answer them. Well unless a regulator asks. Like the timing of the warrants being issued, share registration, and who is holding the shares for the required 6 month period.

These people are sophisticated investors with expensive lawyers who help structure transactions designed to protect them form violating any securities laws like trading as a group without disclosing it. That type of SEC violation is hard to prove and I don’t know if the regulator will get the evidence to prove it but it is good to see them asking the questions. I want to hear from readers and market participants on what you think some of these SEC questions are trying to get at. Use the comment section or email me at with your thoughts.

MGT says it has answered the SEC subpoena.

SEC Subpoena MGT Capital September 2016 by Teri Buhl on Scribd

California DOJ investigating Honig and The Frost Group

UPDATE: Since publication of this article, I learned that Daniel Fisher, the plaintiff in the Biozone lawsuit reference below, submitted a letter to the SEC, through his attorney, withdrawing the SEC whistle-blower complaint that Mr. Fisher filed against Barry Honig, Michael Brauser and The Frost Group. In a separate letter from his attorney to the FBI, Mr. Fisher also withdrew any direct connection to the FBI investigation referenced below. Mr. Fisher sent the letters pursuant to a voluntary settlement agreement in the Biozone lawsuit and an Order enforcing that settlement by Judge Laurel Beeler of the Northern District of California which stated: “The court orders [Daniel Fisher] to withdraw his FBI and SEC grievances against [Honig, Brauser and The Frost Group]….which fall[s] within the scope of his commitment under the settlement.”

In a separate letter to Judge Beeler enclosing Mr. Fisher’s withdrawal letters, his attorney stated: “[Mr. Fisher] does not believe this SEC notice has any impact on the existing SEC investigation into [Biozone’s successor] Cocrystal.” In an SEC filing make earlier this year Cocrystal Discovery disclosed that it had received a subpoena from the SEC in 2015 and that it was the subject of an ongoing SEC investigation.

Original Text

The Northern California DOJ has been sniffing around asking tough question about the investing and trading activities of a billionaire Philip Frost, a former boxer turned penny stock investor Barry Honig, and a man Honig has done investing deals with Michael Brauser.

A person who took investments from this trio and ask for anonymity for fear of retribution told this reporter,”The FBI told me in our interview they were investigating Honig, Brauser, and Frost.”

A term sheet filed in a legal battle in Northern California court shows all three men invested together in a company called Biozone. The case, which alleged the Frost Group was involved in a pump and dump, made it pass a motion to dismiss and then settled. A person familiar with the settlement said the plaintiff got $2 million although it’s unclear if the Frost group actually paid the settlement in full.

Three years latter the FBI investigation into Biozone is still open. This reporter has seen a letter from the FBI that states this person is a potential victim of securities fraud. A check in the FBI’s victim notification system, seen by this reporter at press time, show the investigation is still active but doesn’t list specifically who the investigation is about. Biozone is the only company the person interviewed by the FBI held stock in.

The Biozone investor also said they had been interviewed by the Securities and Exchange Commission about their dealings with Barry Honig, his deal lawyer Harvey Kesner, and others the regulator thinks invest with Honig.

Attorney Kessner has been representing Honig in his microcap investing deals for years and often ends up as counsel for the companies Honig invest in. He recently became a named partner at a New York law firm that is very active in the microcap stock market called Sichenzia Ross Friedman Ference LLP. Kesner replaced partner Richard Friedman who suddenly announced he was leaving with his team to join another firm Sheppard Mullin in October. The firm is now called Sichenzia Ross Ference Kesner.

Kessner through his attorney told this reporter he thinks Freidman’s departure from the firm he had been with for a long time wasn’t sudden but contemplated for months but we haven’t heard directly from Friedman on why he switched law firms.

Rumors have been swirling around the microcap space for a while now that attorney Kesner’s work with Honig could place him in the hot seat with the SEC but the Biozone investor is the first person I’ve interviewed who said the SEC probed him about Kesner’s role with Honig. Kesner has not been publicly named in any SEC enforcement actions. Kesner was fired from big law Haynes and Boone, where he worked before joining SRFF. He then sued the firm for breach of contract and defamation in 2010 but it’s unclear if anything came out of that reaction to being fired. Haynes and Boone said the suit was meritless. Kesner withdrew the suit voluntarily a month after it was filed and there was a statement the parties had settled without any details.

EDITOR NOTE: This story was hacked and taken down from the publication on February 7 2017. It originally ran on November 8th 2016. Barry Honig sued me for libel for multiple stories I reported on and then suddenly dropped the suit two days before our motion to dismiss was to be filled with back up documents sourcing the reporting and a copy of a SEC subpoena that names him and others who invested in MGT Capital. Honig had originally demanded I apologize for my reporting and denies he is under SEC investigation. The reporting stands and I never apologize for informing the public on a matter of public interest. I would like to thank my attorneys Chuck Tobin and Christine Walz at Holland and Knight for their excellent legal work that helped protect sources and support accurate truthful reporting and opinion.

Hacked By XwoLfTn

Hacked By XwoLfTn – Tunisian Hacker

UPDATE 2.7.17 6pm – Well it looks like someone hacked my publishing platform and took down a story in the last 24 hours. Luckily I have a paper copy of the story and will be re-reporting the original story within the week.

Hacking a business site and trying to steal my assets (the reporting) is a federal crime. I have reported it to the FBI office in NYC and have a security company looking into the IP addresses that entered the site.

I’m asking readers for $300 in donations to help pay for a private server to host this site and extra firewall protection. The reporting that was hacked was about Barry Honig and his deal lawyer’s financial interest in a stock transfer company. I need your help to keep the reporting visible for everyone to read. You can donate via the Paypal button on the top right of the homepage. Thanks in advance for your support.

MGT Capital Receives SEC Subpoena Seeking Information about Barry Honig and Eight Other Individuals

UPDATE: On September 15, 2016, MGT Capital received a subpoena from the Securities and Exchange Commission. The subpoena requested documents and communications between MGT and Barry Honig. It also sought documents and communication between MGT and eight other individuals and eleven entities associated with the individuals.

I have not confirmed with the SEC that Barry Honig is in fact the subject or target of any SEC investigation. No person at the SEC has ever informed me that the SEC is investigating Mr. Honig. The SEC, when called for comment, told me that they do not comment on ongoing investigations.

Original Text

Microcap investor Barry C. Honig is a subject of an SEC subpoena related to his role in trading and investing in shares of MGT Capital ($MGT). MGT Capital is trying to complete a reverse merger with famed tech entrepreneur John McAfee. I am reporting exclusive news today for Growth Capitalist on what’s inside the Securities and Exchange Commission subpoena MGT Capital announced was lobbed against them late last week.

News of the SEC formal demand for answers from the company delighted short sellers to the tune of a 40% drop in MGT’s stock. The company, currently run by CEO Robert Ladd, says it does not believe the SEC is targeting any of the company executives. But shareholders have expressed doubt this week given the lack of details the company was allowed to disclose about the regulatory investigation. On top that the NYSE, where MGT trades, announced it wouldn’t accept the new shares that are set to be issued in the reverse merger with John McAfee’s cyber security companies. The national stock exchange was kind of a jerk about it because they didn’t offer up a reason for the share issuance halt. Unfortunately, it’s a big clusterf–k of unknowns for the company and shareholders right now.

But one thing that my reporting makes very clear is the SEC wants to make sure Barry Honig isn’t’ doing anything shady (or out right illegal) with this company. According to insiders who saw the SEC subpoena, a large portion of the regulator’s questions are about Honig, his company GRQ Consultants, and people who invest with him. I can also confirm Honig has been calling SEC enforcement defense lawyers this week looking for representation. I first reported on Honig’s alleged illegal actions in my “Attorney Gregg Jaclin blew up his life and got busted for creating a shell factory scheme” story this Spring. The central theme of alleged bad behavior is Barry uses other people to run a company he is secretly controlling and indirectly pays stock pumpers to tout the company without disclosure.

You can see here in a DOJ plea deal made by one of Honig’s alleged puppet CEOs how Honig allegedly runs things behind the scene. This plea deal was first reported and unearthed by me in a story for Growth Capitalist in May.

The SEC has never been able to pin anything on Honig. We do see a FINRA action settled against him as a young trader in 2000 when he was working for a questionable PIPE financing firm called Ramius Capital (or Ramius Securities). On June 14, 2000 FINRA said Honig had acted as an affiliate trading with others and hid it by running the trade through two people instead of one.

Barry Charles Honig (CRD #2362713, Registered Representative, New York, New York) submitted a Letter of Acceptance, Waiver, and Consent in which he was fined $25,000 and suspended from association with any NASD member in any capacity for 10 business days. Without admitting or denying the allegations, Honig consented to the described sanctions and to the entry of findings that he sought to inappropriately coordinate a trade report to ACT with another market participant as two separate trades instead of one.

Honig has a SEC deal lawyer, Harvey Kesner at , who apparently has been able to keep the SEC at bay in tons of questionable pump and dump deals Honig invested in. I know from interviewing MGT’s executives and reviewing Honig’s financing transactions that he wasn’t a control person at MGT. CEO Rob Ladd, who used to run a hedge fund, put blockers in Barry’s finance deal that don’t allow him to own a certain percent of the company. What we don’t know is whether Barry teamed up with his favorite investing partner Michael Brauser and acted as an affiliate in trading MGT stock, which blew up to a 700% gain when news of a John McAfee merger was announced in May. Affiliate trading without disclosure is a big SEC no-no, which I explain my story today at Honig through his attorney did not return a request for comment.

For now it’s a wait and see as MGT scrambles to get the SEC to clarify to stock exchanges that the reverse merger deal is clean. And market participants sit on the side line to see if the SEC can get the goods to finally charge Barry Honig.

Clarification 9.23.16: Barry Honig is pulling out the big legal guns apparently worried about anyone reporting on what’s inside that SEC subpoena. As of 5:30pm I was contacted by a California attorney, Charles Harder (who repped Hulk Hogan), for Honig demanding to have the story taken down and to write an apology. I refused and stand by the sourcing in this story. I have spoken with people who have seen the subpoena again and clarified a sentence in the story that relates to a large portion of the SEC’s questions are centered on Barry Honig, his company and people he invest with. The original sentence said “90% of the SEC questions are about Barry Honig.” Additionally, Honig had two days to respond to questions about the subpoena before the story ran and refused to return a call and email for comment.

Update 10.7.16: One of the sentences in this story that Barry Honig has denied through his attorney Charles Harder is that he invest with Michael Brauser. Harder wrote in item #9 in his demand letter they sent me to get the story taken down:
“Implication that Mr. Honig “teamed up with his favorite investing partner Michael Brauser”. False; the two have not teamed up.

I’d like to take the chance to remind readers of this 2012-2013 litigation against Barry Honig, Michael Brauser, and the Brauser Honig Frost Group for their role in Biozone Pharmaceuticals, Inc. It was filed by the company’s former founder Daniel Fisher. This is from Fisher’s amended complaint filed in Northern California District Court on 11.22.12 . Case number 3:12-cv-03716-WHA

“In January 2011, Plaintiff Fisher met with a group of investors, the Defendant representing
itself as Brauser Honig Frost Group (“BHFG”). Over the course of the following six months, this
group of investors misled Plaintiff Fisher through an investment scheme designed to divest
Plaintiff of all of the economic rights and goodwill he had built through his company over the
course of the previous 22 years.”

After Fisher beat their motion to dismiss and the case moved into discovery we see the case was settled with the defendants paying Daniel Fisher half a million dollars.

And that’s just one reason why I stand behind my reporting, opinion, and sourcing in this or any story of mine on Barry Honig!

UPDATE 11.4.16 : I have filed a letter to the federal judge in Honig’s lawsuit against me that you can read here. Honig used a process server who lied in an affidavit that he served me. I have video to prove he is lying. Additional, I informed the judge Honig asked MGT Capital CEO Rob Ladd to call me and set up a private ‘off books’ meeting. A move that is pretty much a no-no legal tactic given he sued me. His lawyers are supposed to be the ones to contact me. I obviously said no to the meeting and told Rob Ladd if Mr. Honig wants to speak to me and comment on any of my reporting he can call me through his attorneys – he has enough of them. This secret meeting tactic is something I have learned he has used in other litigation…it feels like the purpose is to try and figure out if I am going to give up names of my story sourcing.

I still need a pro bono lawyer to go up against Hulk Hogan’s attorney Charles Harder. Honig apparently tried to hire Harder (an expensive lawyer who has been in the news for his anti-journalism legal work) to scare me into stoping reporting and it didn’t work. If you are interested in this easy to win suit please email me at I’ve been told NY laws make it favorable to sue back for attorney fees in NY court and this is an easy case to win given my sourcing and the fact a lot of what I wrote here is opinion. Donations are also helpfully now in case I have to defend my self pro se.

UPDATE 1-10-17: I’ve secured a top first amendment lawyer to represent me pro-bono. Chuck Tobin of Holland & Knight filed last week in Manhattan Federal Court to be lead counsel. We have till February 10th to file a response to Honig’s claim. I would like to thank Holland & Knight for stepping up and defending the rights of a freelance journalist.

UPDATE 2-21-17:Barry Honig voluntarily withdrew his lawsuit against me on February 8th. This was two days before my attorneys were due to file our motion to dismiss and we were given no warning or notice of why the suit was being dropped. I thought the litigation was over but now it looks like Honig and his attorney Charles Harder were just making a move to judge shop because today I got a repeat retraction letter asking again to take down my reporting and apologize. It’s my expectation that team Honig will just refile their suit in another court or another state which means the bullying of this journalist for reporting on a matter of public concern continues.

AJ DiScala Co-Conspirator admits they did illegal trades in Microcap Fraud Ring

UPDATE 8.8.16– Court records show Goodrich was ordered to pay only $3,938 in forfeiture fines for his role in the manipulation of a stock called Cubed. He is still waiting to be sentenced.

Original Text
A So-Cal stock broker admitted to aiding in the pump and dump of penny stock Cubed with accused microcap fraudster AJ DiScala last week. Darren C. Goodrich, 37-year-old head trader at BMA Securities, plead guilty in Brooklyn federal court on June 27th to one count of conspiracy to commit securities fraud for his role in artificially controlling the price and volume of Cubed shares through fraudulent concealment of AJ’s crew’s ownership interest in the stock and engineering price movements through wash and match trades. The charge caries a 5 year max jail term plus criminal forfeiture of assets through fines and restitution. Goodrich was arrested on multiple counts of securities and wire fraud on November 2, 2015 with the possibility of over 20 years in jail.

I’ve reported extensively since 2014 on the alleged pump and dump stock schemes the DOJ thinks AJ DiScala led with New York-based attorney Darren Ofsink and Nevada-based attorney Kyleen Cane. All three are still fighting the charges with plans to go to trial. The DOJ has now secured four guilty pleas from DiScala’s crew of co-conspirators, which included his investment banking partner at OmniView Marc Wexler, who are presumable now helping the DOJ with their case. The DOJ says Goodrich only acted illegally in the manipulation of one of four stocks in their complaint.

According to FINRA records Goodrich was a licensed investment advisor and broker for 14 years. He spent most of his career as a broker for Burt Martin Arnold who founded El Segundo-based broker-dealer BMA Securities. The broker dealer has multiple FINRA enforcement actions, fines and sanctions against them. On November 11th, 2104 the broker dealer, Goodrich, and Arnold were charged by their regulator for failure to supervise deficiencies regarding sales of unregistered securities, failure of duty to conduct a reasonable inquiry into the issuance of large blacks of stock to only a few clients who sold millions of shares just six days after being issued the free trading shares. The manipulation of Cubed occurred between March-July 2014. The FINRA charges don’t say which microcap stock these charges are for but they sound very familiar to how the DOJ described the Cubed manipulation in their complaint against Goodrich a year later. Goodrich and Arnold (who was not charged by the DOJ) were suspended by FINRA for 30 days and broker dealer had to pay a hefty fine of $325,000. Goodrich left BMA Securities a month before he was arrested.

Goodrich’s plea deal causes new headaches for attorney Kyleen Cane. She is alleged to have been the thought leader behind their shares into escrow account scheme. According to DiScala, who I first interviewed in September 2014, Cane came up with the idea that the mom and pop investors, who brokers like Goodrich would convince to buy Cubed’s stock, would have their shares deposited in an escrow account for the first six months to a year to make sure their wasn’t a rush to dump the stock of the newly reverse merged company–this included AJ’s own shares he said he agreed to have put in escrow in an effort to support the newly traded stock. The DOJ says unbeknownst to investors Cane, who controlled the shares going in and out of escrow accounts, released millions of the shares, that were suppose to be restricted, to dummy nominee accounts that AJ and his co-conspirator brokers controlled. And those shares are what aided in creating a false impression there was a buying and selling in the stock to make a market and increase the share price. Cane in her legal motions denies her leadership role in the escrow scheme. But with Goodrich now pleading in open court that Cane told him how she was doing the scheme there is new strong evidence against her. This is on top of the wire taps that DOJ has of AJ and Darren talking about Cane’s scheme.

Cane was formerly a man named Michael Cane, according to bar records. She has filed some aggressive litigation in Stamford and Las Vegas state courts against some of the investor deal finders in Cubed who were not arrested named Max Kahn and Michael Caridi. She throws out the notion that Kahn and Caridi are two of the confidential witnesses the DOJ doesn’t name in their original charges in her complaint. According to Kahn and Caridi’s attorney at Anderson Kill this claim is ‘absurd’. But whoever got the DOJ’s attention to bring to case and ask for wire taps of AJ’s cell phone is still unknown.

Goodrich is still out on bail, his father an LA-based litigator Brenton Foster Goodrich put up $250,000 for his son’s million dollar bond and his wife Mindy Goodrich put their amazing ocean view home as collateral. There is no date set for his sentencing yet as I am sure the DOJ will wait till the DiScala case is concluded. Goodrich, who grew up in the Palos Verde section of L.A.’s southbay, was forced to sale his family home for $6.15 million in May. You can see a sales video tour of the beautiful 5 bedroom, five bath modern home here. I am assuming the house was sold to help pay legal fees and upcoming restitution.

Goodrich and BMA Securities did not return a call for comment. I reached out to AJ’s attorneys about Goodrich saying ‘AJ’s guilty’ but they did not return an email for comment.

Unsealed Bear Stearns emails shows Executives lied about Bank Failure

For a few months I’ve been fighting behind the scenes to get a private civil fraud lawsuit against Bear Stearns and its senior leaders Jimmy Cayne and Warren Spector unsealed. I won that battle last month in Manhattan federal court and discovered a war chest of internal emails by over a dozen Bear Stearns executives and confidential communications to its regulator, the Securities and Exchange Commission, that showed these men have misled the public for 8 years on the how, when, and why Bear Stearns really failed. I then chose to partner with one of my favorite and highly respected investigative journalist Roddy Boyd to report a story on how the SEC knew as far back as 2005 that something wasn’t right about the way Bear Stearns was disclosing its risk in the fixed income-mortgages department, run by Tom Marano, that eventually took down the bank. Shockingly the unsealed emails showed Bear’s CFO and public face to investors, Sam Molinaro, tell his team “we need liquidity ASAP” on the same day (Aug 3rd 2007) he held a public investor call reassuring Bear Stearns investors capital levels and liquidity was just fine.

The fact pattern I uncovered, which shows the depth of internal awakening by Bear Stearns executives back in the summer of 2007 that their beloved 100-year-old bank was in serious trouble and they planed to keep it quite from The Street and investors, is beyond troubling. But when I realized the SEC could have published a letter Molinaro sent them detailing what their real subprime risk was (and not disclosed in their financial statements) months before the bank failed and admitting they could go under; feels like the SEC aided these executives in their crimes of investor fraud and complete breach of their fiduciary duties.

I urge all my readers to take the time to read our story at the non-profit investigative journalism publication This publication was founded by Roddy Boyd and depends on the generous donations of readers to cover and report stories that a lot of main street financial publications won’t touch but should. You can find the DONATE NOW button on the top right of the home page. I spent my time and money going through the legal system to unseal this case and make these important documents available to The Street, other reporters, and the investing public to read for free. It took Roddy Boyd and I a lot of digging and skill to write an engaging story that corrects the record and exposes this truth that occurred during one period of the financial crisis. Please join the other readers who have donated to help us cover the cost of this important work.

I would also like to thank the New York-based law firm of Rottenberg Lipman Rich and attorney Tom Chase who represented me in our legal work to get the case of Bruce Sherman v. Bear Stearns unsealed. And to William D. Cohen who gave credit to my work in the New York Times today. He’s got his own amazing account from rare interviews with Bear executives that shows the level of deception these men went through to push blame to anyone but themselves.