Iroquois’ Richard Abbe quits XpresSpa while company battles Fraud Lawsuit

An XpresSpa board member, Richard Abbe of Iroquois Capital, has quit the company board during the middle of a heated legal battle accusing board members of deception, undue influence, and fraud. The day before his resignation Abbe, who is named personally in the lawsuit, took the extra step to retain his own lawyer in the securities fraud lawsuit that I first reported on in August.

Over the holiday break, when no one was paying attention to SEC filings, XpresSpa filed an 8-K on December 26th announcing Abbe’s departure as of December 18. Then after years of board service XpresSpa suddenly decided they should vote to offer the hedge fund manage a holiday gift. The board agreed to indemnify Abbe and advance any legal fees he might need to defend his good name from allegedly being involved with shenanigans, like you know misleading regulators or stock holders. The 8-K says this nice little exit present also includes the company picking up the tab for any fines or settlements Abbe might have to pay as a result of his work on the board. But what’s not clear is if Abbe was found acting in bad faith or criminal conduct that the indemnity would still hold.

The defendants in this case are being accused of a fraudulent scheme to trick the founders of an airport spa business, XpresSpa, into a merger with a public Microcap company that resulted in a massive loss of their business investment.The public company was called Form Holdings.

During the litigation, that begin in November 2017, I reported an ex-wife came forward with some potentially damaging evidence that would put some of the defendants in the hot seat with the Securities and Exchange Commission. That’s because the Sarbanes Oxley Act upped the anti for individuals to be charged criminally for making false claims in a Proxy Statement. A proxy statement is a legal document containing the information the Securities and Exchange Commission requires companies to provide to shareholders so they can make informed decisions about matters that will be brought up at an annual or special stockholder meeting. Issues usually covered in a proxy statement include proposals for new additions to the board of directors, information on directors’ salaries, information on bonus and options plans for directors.

More importantly, a proxy statement discloses any potential conflict of interest between the company and its directors, executives and auditors. Specifically, proxy statements must list any related-party transactions that occurred in the past between the company and its key personnel. Not disclosing conflicts of interest and related party transactions is exactly what the plaintiffs in the XpresSpa are accusing Abbe and friends of doing.

I have previously reported how Abbe is intertwined in this litigation drama with his fellow New York investing buddy Bruce Bernstein, who is president of Rockmore Capital. Bernstein and Abbe have a history of investing along side another small cap financier who has been widely reported on for his alleged leadership role in a pump and dump ring. That man is non other than Barry Honig. One such company is Vringo the predecessor to Form Holdings who is a named defended and the XpresSpa case.

In fact Abbe’s fund Iroquois Capital was named in one of the SEC subpoenas in the Honig Case. The government was looking for communications from Iroquois and one of the companies named for being a pump and dump called MGT Capital. I was first to report on the contents of the SEC subpoena, which was fishing for information to prove this group was trading as undisclosed affiliates and influencing public company CEO’s to get false press release published to drive up the price of a stock.

Surprisingly Iroquois capital, nor its fund managers, were named in the original SEC complaint against Team Honig. The SEC asked the court to file amended complaint, which is due February 6, that could add more names to the Honig enforcement action.

The XpresSpa case is currently in the Summary Judgement phase. This is where the defendants ask the judge to rule on the case without lengthy discovery and depositions being allowed. The former XpresSpa owners will be hoping the judge doesn’t allow summary judgement and the case moves forward to trial. This would force Bernstein and Abbe to have to do depositions and turn over more internal communication via discovery. Keep in mind of a lot the juicy parts of this case are redacted from public filings. A notion I find unfair to public markets and XpresSpa current and future common shareholders.

You can find the SEC subpoena here:

$XSPA 8-K Abbe Board Resignation:

Previous reporting on XpresSpa, Abbe, and Bernstein:

Iroquois Capital’s Richard Abbe Sued For Fraudulent Takeover Scheme of XpresSPA

Rockmore Capital’s Bruce Bernstein Ex-Wife Outs him for possible SEC Violations in $XSPA Deal

NY Court Case putting Journalist Source Protection At Risk

UPDATE 3.4.19: The New York Daily News is reporting 16 other news organizations have joined my fight to unseal this case and to defend the reporters privilege to protect sources. On March 1st legendary media attorney David Schultz, who leads the Yale Media Freedom and Information Access Clinic, filed an AMICUS brief on behalf of The New York Times, NY Post, Newsday, NY Daily News, The Intercept, Gannett Newspapers, The parent company of the New Yorker, the AP, Hearst, Gizmode Media, First Look Media, Reporters without Borders and more journalist non profit organizations. The NYDN reported the brief centers on the importance of the public and the media’s right to an open court system. No one should be able to sue a journalist with an attempt to get access to their protected source material and then have the court keep the fact they did this quite; which is what happen to me. The AMICUS brief shows other journalist and their news publications don’t want the NY State Court to repeat these kind of rulings against the media working to inform the public. I appreciate my peers in journalism supporting my byline and the work of any freelance investigative journalist who doesn’t have powerful internal media lawyers to back them up.

The hearing to unseal this case and dismiss any action trying to force me to reveal a source is tomorrow March 5th at 2:30pm. Court Address: 80 Center Street, room 307, NYC, NY. I encourage any NYC readers and journalist to attend and show your support for an open court system. Donations to are also helpful to cover expenses.

NY Daily News story:

The subject of one of my investigative stories is attempting to use the New York State court system to force me to disclose a confidential source key to my reporting on the person’s alleged wrongdoing. On top of that,at the subject’s request, a judge has temporarily allowed the lawsuit to be sealed so that I can’t make public who is trying to do this. It’s an alarming legal move that goes to the core of press freedom, free speech, and source protection in this country. My readers should know I have every intention of fight this. With over a decade of investigative reporting under my belt I have never revealed a protected source.

To fight this injustice I have been working quietly behind the scenes to secure a top first amendment lawyer to defend this case in court this month. I am doing this not just to protect myself but for the rights of all journalist working with confidential sources so that the actions demanded in this case don’t become case law that could be used against other journalists.

Today I am pleased to announce the Press Freedom Defense Fund has award me a grant to help fund this defense and Mark Bailen and Peter Shapiro of Baker Hostetler have stepped up to take the case. The case caption is: Anonymous v. Anonymous Index No. 655887/2018 (Sup. Ct N.Y. Co.) and filed in New York State Supreme Court in Manhattan.

Stay tuned for more as we fight to unseal this case.

Thanks in advance for your donation support and continued readership!

You can find court dates for this case here:
Read more about the Press Freedom Defense Fund here:

That Honig-Morgan Stanley Story

On Friday November 16, I ran a story about Barry C. Honig and his Morgan Stanley investment adviser Kyle Wool. I had interviewed a person via email who proactively came to me saying they had copies of emails between Wool and Honig that showed misconduct and possible kickbacks being paid by Honig to encourage Wool to push his clients into stocks that Honig was an early investor in order to ‘pump up’ a stock and get trading volume. I published copies of the emails in my story. Within a few hours of publishing the story I then received an email saying the emails were fakes and the person who I was talking to had lied to me about some of the details they provided. The story was immediately removed because the evidence I was provided with was tainted.

Before I ran the story Morgan Stanley public relations and Kyle Wool were informed about the emails and what they said. Morgan Stanley confirmed Hoing was a client. And Kyle Wool didn’t say a word about any of the details not being true. My source told me Wool and Kyle have had a long term relationship and do party and socialize together, which checked out to be true. And Kyle Wool does have 3 customer complaint disclosures in his FINRA record. In 2009 a customer alleged Kyle Wool, while employed at Oppenheimer & Company, made unsuitable investment recommendations, churned investments and misrepresented material facts. The complaint settled for $337,500.

The person who contacted me Knew Honig’s correct AOL email address and Wool’s Morgan Stanley email address. They also knew the two had a professional relationship, which has never been disclosed before in any reporting on Barry Honig.

The email address the source used was a Proton email : The email of the person who sent me the second email was This suggest that the original email and the second email was sent by the same person or group. After the story ran the email account was shut down. A new email address was created to let me know the source had lied to me. I wasn’t familiar with Proton and have since learned it is an email service that uses anonomyzers and can be difficult to subpoena.

Here is the email saying the source lied.

Since the story came down I have been contacted by readers who said they thought the premise of the story is true because they either know Wool and Honig or they heard rumors about their relationship on The Street. Rumors are not journalism and they don’t go into any of my reporting. If you know these two men and are willing to go on the record of course I would like to hear from you. I will continue to cover Barry Honig and the SEC investigation into alleged fraud in small cap stock investing.

Thank you for always being loyal readers.

Is there a new Laidlaw-Honig Pharma Offering in Play?

This story has been updated with a response from Laidlaw

It appears Honig’s lieutenants at New York brokerage Laidlaw & Company have been actively selling a new deal. One riddle with conflicts of interest and possible self dealing for Matt Eitner and Jimmy Ahern. This week I reported on an Limited Liability Company called PPLL Partners that is controlled by Eitner and Ahern. The duo call it Pump Pump Loose Loose and allegedly past brokers at the firm say it’s used as a vehicle to pay kickbacks to for getting Barry Honig-backed deals sold to Laidlaw’s retail clients. But now it looks like it will also be used to set up the next Honig-backed investment. Last week, Barry Honig was charged by the Securities and Exchange Commission for running a stock manipulation scheme in multiple securities for years.

According to brokers at Laidlaw they’ve been instructed to sell a private placement deal in PPLL Partners to the firm’s retail clients. This type of offering is known as a Regulation D offering and can only be sold to accredited investors. Allegedly the pitch is that PPLL Partners is now an investment fund that is going to buy small companies that work on drug development for diseases like cancer. One such firm PPLL Partners might buy or invest in is Voltron Therapeutics. On April 4th Matt Einter filled a notice with the SEC that PPLL Partners was trying to raise $500,000 and that $305,000 has already been sold.

In Eitner’s required disclosures for FINRA he states that he has a financial interest in Voltron Therapeutics but only spends 4 hours a month working on drug development and that “it’s not investment related”. This kind of language was likely suggested by his outside counsel so FINRA doesn’t ask for more details about the firms Written Supervisor Procedures for registered reps outside business activities and investments. Since Eitner is the CEO and holds a series 24 license he is the one that is suppose to be the broker supervisor of all capital market deals and the offerings the retail brokers sale. But since according to an internal document obtained by this reporter Eitner has also listed himself as the CEO of Voltron Therapeutics; so he needs someone else at Laidlaw to supervise the firm raising money for PPLL Partners to invest in any companies he would own. And the firm has to disclose all these conflicts of interest in the private placement memorandum they give to perspective clients to buy into the offering. At press time it is unclear if this has been done.

I have asked the national retail branch manager, Alex Shtaynberger, if he is supervising this deal today and also John Coolong, the CFO and Chief Compliance Officer. According to FINRA records both men hold series 24 licensees and could do the supervision so the firm is in compliance with FINRA laws. Neither Coolong or Shtaynberger would respond to an email for comment but Matt Eitner has finally deiced to respond this reporter. I got a carefully written email that said they want to answer my questions but couldn’t do it till Monday. I have learned Laidlaw clients are already calling the firm asking about the validity of their investment in PPLL Partners after my story earlier this week exposed Either and Ahern’s relationship with Barry Honig. I told Eitner I would not wait to print this story but if they wanted to comment at some point I will add their comments after they are fact checked.

Voltron Therapeutics was officially registered as a company in Delaware in July 2017, according to state records. I made a call to the State’s corporation formation office and they said an annual report hasn’t been filed yet for the company. But what is most interesting is how this company was formed. According to internal emails obtained by this reporter, attorney Michael Lerner at Lowenstein LLP began writing up Voltron company formation documents for Jimmy Ahern and Matt Eitner in May 2017. These documents also included stock issuance to Majella Partners, which is owned by non other than Eitner and Ahern. Eitner discloses some ownership in Majella in his FINRA records and this reporter has seen communication written to Jimmy Ahern at Majella Partners. The company formation agreement also includes equity incentive plans for ‘consultants/advisers’ and a subscription agreement for Majella Partners. That means Majella and anyone the company want to pay as a consultant would get cheap stock in Voltron. Voltron is still a private company but if it did a reverse merger that founders stock could be valuable if there was run on the stock.

After Ahern got the formation documents from his lawyers he then sent an email the same day to Barry Honig and John O’Rourke at their AOL and Gmail accounts. On May 19, 2017 he told Honig and O’Rourke, “Just getting started here but I figured I would pass these along.” The formation docs for Voltron was what Ahern was updating Honig on. Ahern signed the email Managing Partner, Head of Capital Markets, Laidlaw & Company. Now as I previously reported Ahern doesn’t have a series 24 license or an investment banking license. He doesn’t have the required licenses to even be running an investment banking deal. So why is he emailing Barry Honig like he is running this deal.

In a brief interview with Marc Ellis, Laidlaw’s former Co-President and Chief Compliance Officer, he told this reporter after reading my story on how Either and Ahern operate the firm that “I knew something like this was going to come out at some point. The conflicts appear to be endless.” (Ellis served until mid-2012 when Eitner and Ahern were being push up the ranks by the Sands brothers to take over the firm.)

This deal is a chance to see how a Honig style deal gets started. It’s hard to tell what Voltron even is? I have found no mention of it on bio pharma drug chat broads and no public filings except it’s Delaware corporate formation. That doesn’t mean it’s not a real start up trying to buy drug development licenses but based on the SEC enforcement action Honig’s investments often don’t have the real technology, asset, or potential deals the companies claim they do. What this looks like to this reporter is the beginning of the development of a cheap share exchange using other peoples money to sell an idea to unsuspecting retail investors that the players involved know will never work out.

UPDATE 9.14.18 4:15pm – A half an hour after I printed this story Laidlaw has magically come up with a response via their CFO John Coolong: “Laidlaw is not conducting a securities offering for PPLL Partners LLC. Rather, it is an outside business activity and private securities transaction by a few registered representatives. Pursuant to FINRA Rules, Laidlaw has reviewed and approved this outside business activity and private securities transaction. I, as Chief Compliance Officer, am supervising this activity.”

This story didn’t report they were selling a securities offering in PPLL Partners. I am reporting it’s a Reg D private placement but note it’s still selling an investment in a company owned by its CEO. Also we don’t know WHO at Laidlaw approved the outside business activity. That’s important to the firms compliance procedures. Also given that John Coolong is the CCO reporting into the CEO – Eitner – still feels like a big conflict of interest because he is not Eitner’s direct supervisor?

Additionally, since my first story on Laidlaw ran on September 12 the company has removed Jimmy Ahern’s photo from their Executives page on the Laidlaw website. Maybe the whole he isn’t licensed to be a supervisor of a broker dealer thing sunk in?

Editor Note: I would love to hear from any Laidlaw investors who bought into the PPLL Partners Reg D deal. You can reach me at

Laidlaw Execs helped Barry Honig Execute Stock Manipulation Scheme

Last week’s Securities and Exchange Commission suit against high-profile small-cap equity investors Barry Honig and Phillip Frost appears to be the first moves in a much broader crackdown against a network of brokers, promoters and even attorneys that worked with them on numerous transactions, according to internal documents and private communications I’ve obtained. Creatively named llcs, like Pump Pump Loose Loose Partners, were created to hide what appears to be kickbacks paid for pushing unsuspecting retail clients into Team Honig’s deals when it was time to dump the stock.

As the SEC went to lengths to note in their claim, a large chunk of Honig’s alleged profits came from heavily trading shares prior to the release of “favorable and materially misleading articles” that suggested there was growing investor interest in these stocks.

While the pre-release trading was mostly Honig, Frost and their associates, once the articles were released, a broker-dealer with a decent-sized investor network was integral to sustaining these alleged promotions. Based on a series of interviews, as well as documents I have either obtained or seen — including emails, texts and internal memorandums — London-based Laidlaw & Company is Honig’s preferred broker.

Within Laidlaw, two penny stock veterans, Matt Eitner and James Ahern (both of whom are in their 30’s and who had worked together at Aegis Capital) are Honig’s lieutenants in executing “the dump” portion of the purported stock manipulation scheme. Eitner and Ahern’s path to running Laidlaw is typical of many boiler rooms — they were put in charge after FINRA expelled the firm’s original owners, Martin and Steven Sands of Sands Brothers Asset Management. (According to a former Laidlaw executive who knows both Ahern and Eitner, Ahern runs the firm’s daily operations but he can’t hold the chief executive title because he failed his series 24 — FINRA’s supervisory test — twice. Thus Eitner, who did pass his series 24, is listed as the CEO.)

Unsurprisingly, Ahern’s record has a few potholes. Starting out at as a retail broker at Casimier Capital (where he worked under Richard Sands, another member of the Sands family) and Aegis Capital before he joined Laidlaw in 2010. The four customer complaints against Ahern, the first from 2005, all claim either their accounts where ‘churned’ or that the trading volume exceeded agreed upon limits. Ahern strongly denied any wrongdoing in each of the four customer complaints, an example of which can be found here.

By way of contrast, Eitner’s record, which mirrors Ahern’s with stops at Casimier Capital, Aegis Capital before arriving at Laidlaw in 2010, is cleaner, with only two complaints.

According to several brokers who worked directly with Eitner and Ahern, their strategy for accommodating clients like Honig was more 1994 than it was 2018. For example, if Laidlaw couldn’t sell the agreed upon amount in a secondary offering, they had a simple solution: they would “stuff” shares into the accounts of retail investors.

In another instance, according to documents I reviewed with former Laidlaw insiders, unsold shares were left in the firm’s principle account. When Sterne Agee, Laidlaw’s clearing firm called and sought answers about the stock, they were told there was a clerical error and Laidlaw was given the day to get the shares sold through the syndicate deal out of the firm’s principle account and into customer accounts. The problem was clients hadn’t really bought all those shares yet so they had to come up with a place to put the shares or Sterne Agee could sound off the alarm bells to FINRA about net capital violations.

Additionally, to give the appearance of a fully subscribed offering, Eitner and Ahern directed Laidlaw’s brokers to park stocks and violate the T-2 settlement rules, according to two people directly reporting to them, one of whom has provided FINRA sworn testimony about these actions. According to this individual, the offerings discussed in the session with investigators were
MabVax Therapeutics, Spherix, Relmada, Meddvex, Pershing Gold, PolerityTE Inc, Protea and most recently CoolTech. CoolTech ticker was recently changed to $AWSM from $IFON. $AWSM is the believed to be the current pump and dump in play by this team.

Laidlaw dealtoys in Honig’s office

All of the transactions above were led by Laidlaw and all featured Barry Honig and colleagues as an early-stage investor.

Per the SEC, here’s how it worked: Honig and his colleagues would acquire large equity positions in exchange for financing a development-stage company’s debt, at which point LaidLaw would come in to do a secondary Regulation D offering to accredited investors or structure a Private Investment in a Public Company (PIPE) deal.

Where it gets interesting is how Ahern and Eitner structured the sales process.

Taking a page from Jordan Belfort’s “The Wolf of Wall Street,” interviews, emails and texts I’ve reviewed show Eitner and Ahern aggressively driving Laidlaw’s 100 plus broker sales force to sell these deals through the use of coercion or even dismissal.

We’re Pretty Good At This group instructions

Laidlaw brokers I spoke to said they often questioned their bosses about why they had to pitch their clients investments with worthless balance sheets and few real assets. They also told me that Laidlaw clients would always lose money long term on these deals. Brokers at the firm were allowed to buy stock in these deals with no limits but when a client called to sell there was often a restriction placed on their order system. They had to call executives to get approval for a sale order which could take days. Instead of telling clients about this internal hold, a move that appears to be design to prop up the stock, these brokers would talk their clients into holding on a few more days or not inform them at all. Another way to solve the issue would be to do a cross-book order. These means shares would be transferred from one clients account to another Laidlaw client without putting the order into the system for market makers to see trading volume.

“WPGAT Deals” in Eitner’s text is describing an LLC set up and co owned by Eitner and Ahern that stands for : We are pretty good at this.

When Ahern talks about it he calls it “We Are Pretty Fucking Good At This”. WPGAT is listed as a managing director of PPLL Partners LLC, which stands for Pump Pump Loose Loose. These two entities are seen on multiple issuer offerings as getting ‘consulting fees’ from $10k a month to $30k. (Link to Protea SEC filing here) It is not uncommon to see consulting fees in small cap offerings. But securities laws say Eitner and Ahern have to direct their brokers to inform the retail clients that senior leadership at the firm is also earning money on the side. And that the money raised in the secondary offers from these retail clients to going back to pay the Eitner-Ahern llcs.

“A broker dealer’s failure to disclose a conflict of interest is a material violation of the securities laws. The BD has an obligation to investors to disclose side payments received from the issuer for on boarding investors. I would strongly recommend the BD get counsel to advise them on these violations. Today’s strict SEC enforcement environment will lead to adverse actions against a BD hiding the ball from investors,” SEC defense attorney Richard Gora of Connecticut-based Gora Law LLP told this reporter.

Ahern and Eitner would reward brokers who sold well on their Honig backed deals by getting paid out of WPGAT LLC money. They were known in the firm as the WPGAT group. WPGAT is believed to be funded through consulting fees or possible cash kickbacks. According to internal documents seen by this reporter and interviews with Laidlaw staff here are some of the brokers in that group: Richard Michlski, Kevin Wilson, Brian Robertson, Michael Murray, Luke Kottke, Daniel Kuhar, Henry McCormack, Christopher Oppito.

To give these brokers a sense that everything at Laidlaw was being done on the up and up SRFK LLP attorney and named partner Mike Ference would conduct the broker’s annual compliance meeting where he presented a slideshow and answered broker questions about compliance rules at the end. Brokers where also directed to speak with SRFK attorneys Ross Carmel and John Hitchings. Honig’s deal attorney Harvey Kesner, who I recently reported was removed from this law firm’s name, also answered questions about deal legitimacy and communicated directly about sales volume on deals with Honig, Ahern and Eitner according to emails seen by this reporter. Ross D. Carmel has since left SRFK and is a named partner at a new New York based law firm. Attorney Ference did not respond for comment.

On Tuesday MabVax, who is Victim company C in the SEC complaint against Honig, sued the law firm Honig recommends issuers use for outside counsel when he invest in their company. That firm is SRFK LLP. MabVax is blaming Kesner and other attorneys at the firm on bad legal advice for how they disclosed and structured capital raising deals for the company.

A study commissioned by Reuters with the assistance of Columbia University Law School identified nearly fifty FINRA registered broker dealers where a large percentage of its brokers had “red flags” on their public disclosures. Attorney David Liebrader who writes the Securities Fraud Lawyer Blog said, “These red flags include customer disputes, arbitration claims, regulatory actions taken by FINRA, the SEC or state regulators, civil actions, bankruptcies and terminations after allegations of wrongdoing. The study sought to identify firms who welcomed or tolerated brokers with these types of disclosures.” Laidlaw & Company was high up on the ‘bad brokers’ study.

Laidlaw’s outside counsel Richard Friedman. a former SRFK named partner who is now at Sheppard Mullin, was called to respond to this story. As of press time there was no response. Barry Honig did not respond to an email for comment about his relationship with Laidlaw. Matt Eitner did not respond to an email or return phone calls to his secretary asking for a response to the evidence I gathered for this story.

Stay tuned for part two of this saga as I dive into details on how the money moved in specific Honig backed stocks at Laidlaw. If you are a broker or client at Laidlaw you can contact me at to have a confidential conversation about your experience.

Unnamed Stocks in SEC fraud suit against Barry Honig Revealed

The Securities and Exchange Commission has finally filed an enforcement action against Barry Honig, Philip Frost, and Michael Brauser for trading as a group of affiliates without disclosing their true stock ownership. A group of ten men are named in the complaint as being part of the fraud with Honig listed as the ring leader. The regulator will be trying to ban the men from the industry and charge them millions in restitution and fines. I reported on September 5 the SEC could be bringing an enforcement action soon when I saw Honig’s attorney Harvey Kesner had been removed from the law firm the bore his name.

I was the first journalist who reported Honig and others were under SEC investigation for the actions detailed in their new complaint two years ago at and here at this publication. Honig hired a bull dog attorney who makes his money attacking free speech named Charles Harder to sue me for reporting he was the target of an SEC investigation. I had the pro bono help of Eric David, a North Carolina attorney, to stand up to Honig’s lawsuit and we litigated until he dropped the suit against me. Honig’s goal was to get through discovery and force me to disclose the names of people I had interviewed that the regulator had spoken to about Honig and told them he was under investigation. I held my ground even when faced with the possibility of being held in contempt and never revealed my sources. I knew the story was true and it was important for the investing public to know how Honig illegally operates.

The SEC was very slow to sue Honig and the three stocks mentioned in the complaint are only the tip of the iceberg regarding pump and dump schemes Team Honig has done. Because I have interviewed multiple people who have worked with Honig or been company executives of small cap stocks that he has invested in I can report who are the unnamed companies in the SEC complaint.

Company A is Biozone. It was run my a Northern California man named Daniel Fisher. Then Honig came in with his crew and took it over. Eliot Maza and Brian Kelley were part of the Honig-Frost-Brauser ring in that company which later was renamed CoCrystal. Maza and Kelley are also charged for securities violations in the SEC’s Honig complaint.

Company B is MGT Capital. It is run by Rob Ladd and for some time John McAfee was an executive of the company. Honig made a bizarre move and sued Ladd and others in the company for basically stopping him from getting more cheap warrants and trying to take over the company so he could do probably do multiple pump and dumps with the stock. Honig won a partial motion to dismiss in his case against Ladd but also disclosed his behind the scenes strategy to give desperate small cap companies bridge loans that they can’t repay and then the debt gets turned in to discounted stock. Honig suddenly dropped the suit against Ladd in May on the same week another one of his investments filed an 8-K admitting the SEC was investigation preferred share investors for not disclosing they were trading as affiliates. That company is Company C in the complaint.

Company C is MabVax Therapeutics and it is odd that the company CEO’s were not charged with an enforcement action by the SEC when it is clear from the SEC complaint they allowed Honig to control decision making of the company and hide his involvement from investors.

The SEC said this case isn’t over in their press release yesterday and that the investigation is on going. I would bet the regulator’s goal is to flip a few of the men who work with Honig and are named in the complaint and then the DOJ could bring criminal charges against Honig and others. There could also be other companies added to the complaint like $COOL, $RIOT, $MARA. Each of these companies were subject of a recent Sharesleuth investigation and story.

Every time I print a story on Honig this publication is hit with a DDOS attack that tries to crash the site and drive up cost of hosting this news publication on the internet. My personal email has been hacked, I have had men show up at my NYC apartment building trying to speak to me about Honig, and had a story removed by a hacker two years ago that involved Honig and his lawyer Harvey Kesner. Let’s just say reporting on this man is costly. That’s why reader donations are extremely important to keep the reporting up and free for the market to read. Please donate to support journalism that makes an impact. There is another story on Honig and other firms he works with and their illegal actions that are not described in the SEC complaint coming soon.

Update 9.10.2018: Bill Alpert at Barrons who has covered small cap bad actors for years has reported an excellent backstory on Philip Frost, Barry Honig and the rest of Team Honig. Bill was early in reporting on what could be stock manipulation run by Team Honig back in 2014. Bill also credited my original reporting in his story.

Here is how that story came about: In 2016 a trade publication I reported for as a freelance journalist called was the first financial news publication to report Barry Honig and others were under SEC investigation. That trade publication is behind a paywall for paid subscribers. I then rewrote that news here at with more colorful language because I thought it was critical for the investing public to know the risk of investing in a stock that Honig invest in. Honig sued me but not the original publication that printed the news which was a clear sign this was nothing more than a bully lawsuit meant to intimated a freelance journalist. I have decided to continue my reporting on the Honig ring here where I can control the content but this publication will go through a legal review and have other journalist or editors review the work before I print so that it’s just not one set of eyes fact checking a story. Those reviews cost money which is why your donations are critical. Thank you to all the readers who have supported this week.

Broker Chief Michael Morris Pleads Guilty in A.J. Discala Stock Manipulation Scheme

In a surprise turn of events the last co-conspirator in the A.J. Discala stock fraud case is changing his plea. Micheal T. Morris who owned and ran one of the New York broker dealers that helped the Discala crew execute pump and dumps schemes in multiple small cap stocks will be in Brooklyn federal court on September 6th to plead guilty. Morris was hit with a superseding indictment after the DiScala trial ended this spring with a jury finding DiScala guilty on multiple counts of securities fraud. On July 27 the EDNY DOJ added an obstruction of justice charge against Morris for lying to the Securities and Exchange Commission when they questioned him about Discala’s pump and dump trades at his brokerage firm Halcyon Cabot Partners. Lying to a federal agent carries a five year sentence. Morris is now facing a total of 10 felony counts ranging from wire fraud to securities fraud to conspiracy.

Morris and his wife Nancy are well known in their Long Island community and members of Pine Hollow Country Club. Nancy Morris signed off on putting their home at 12 Siverbirch Road Merrick, NY for collateral in November 2015 for her husband’s million dollar bail bond.

The original indictment accused Morris of not doing his job in supervising one of his bad actor brokers Craig Josphberg who was a lead player in helping Discala artificially support the price of the stocks he was manipulating and also has plead guilty to pushing main street clients into the bad stock to pump up the price. Morris has always claimed in his motions he didn’t know what Josphberg was doing. He said the same message to his pals at his Long Island Country Club. In fact Morris was also the only who got a separate trial so he wasn’t tried with AJ Discala and a lawyer charged in the scheme Kyleen Cane. It looked like for a while that the DOJ was going to settle with Morris and no jail time would be recommend after they lost their case against Attorney Cane this spring. But once this obstruction of justice charge against Morris came out the girls and guys at the Eastern District of New York were back on their war path.

One of the most telling parts of the case is outlined in the new Morris indictment that says:

On or about February 27, 2015, officers of the SEC took the sworn testimony of the defendant MICHAEL MORRIS in connection with the SEC’s continuing investigation into violations of securities laws and regulations with respect to CodeSmart. During that proceeding, MORRIS made false statements to the SEC in an effort to obstruct, influence and impede the SEC’s investigation. For example, MORRIS falsely stated that he purchased CodeSmart stock on August 21, 2013, solely because the stock looked like a good value, and denied that he had discussed said purchase with Abraxas J. Discala, when, in fact, MORRIS purchased CodeSmart stock at Discala’s request to help prevent the stock price from declining too severely upon Discala’s anticipated sale of CodeSmart shares from accounts Discala controlled.

Around the time Morris was arrested in late 2015 FINRA also brought down the hammer on Morris. They barred him and revoked his firms broker dealer license for taking a kickback in a private placement deal.

A total of ten men and women were arrested as part of the DiScala ring. Seven of them plead guilty as the case was preparing for trial. Discala, Cane, and Morris were the only ones to fight the DOJ since the arrest began in July 2014 and now we see the last hold out Morris has admitted defeat. DiScala was found guilty and Cane got off with a not guilty verdict. It’s unclear how many of the 10 counts Morris is pleading too. Additionally the DOJ hasn’t pushed for a sentencing date for Discala yet which is odd. That usually means they are trying to get him to give up more info on others or get others to give up more info on him to increase or decrease the amount of time they will request for prison.

Only one person who plead guilty a few years ago, Darren Goodrich, has been sentenced and he got a lot more prison time than I expected. On July 12 2018 United States District Judge Eric N. Vitaliano sentence Goodrich to 41 months’ imprisonment for one count of conspiracy to commit securities fraud for Goodrich’s participation in the manipulation of the price and trading volume of the stock of Cubed ($CRPT).

I was the only reporter to get an exclusive interview with Discala and see the evidence the DOJ had collected. I was also first to report at it was Microcap attorney Adam Gottbetter who first tipped the FBI on to what Discala was doing after he was pissed at Discala for kicking him out of a deal and firing him as his attorney. Gottbetter was also arrested for his own scheme in mircocap stocks and spent 18 months in jail.

The last leg of this saga will be to see how much Discala and the 7 others waiting sentencing get in jail time. For A.J. Discala I’d except that will be a long time.

Kesner’s Out: Why is Barry Honig’s Securities Lawyer Retiring

UPDATE 9.5.18 – Harvey Kesner’s law firm has removed his name from the firm today. According to a member of the law firm this a clear signal that his fellow partners don’t want to be associated with him or his ties to his biggest client Barry Honig. You can see here the firm is now named Sichenzia Ross Ference LLP. This dramatic move happen the same week Barry Honig resigns from the board of the microcap company he is a 42.6% owner in called Pershing Gold ($PGLC). This means Honig is currently not on the board of any public companies. These actions could signal an SEC charge or settlement coming in the near future for both men. Remember if you are deemed a bad actor by the SEC you can’t serve on the board of a public company. Kesner and Honig have been unusually silent in recent weeks refusing to answer any questions about why the changes are happening now. And Honig recently put his water front Florida home on the market for $8.9 million. Kesner was the securities transaction lawyer for ($RIOT) Riot Blockchain and MabVax ($MBVX) which have both disclosed they are under SEC investigation. This publication was first to break news about Kesner leaving his law firm.

Original Text 8.29.18
Barry Honig’s securities lawyer, Harvey J. Kesner, is apparently hanging up his shingle. According to a person familiar with his law firm on September 5th Attorney Kesner will retire. Sichenzia Ross Ference and Kesner LLP made Kesner a named partner two years ago after long time partner Richard Friedman left the firm to join Sheppard Mullin LLP. The move comes as public scrutiny over the investing of one of his long time clients, Barry Honig, has come under-fire, which includes multiple SEC investigations into the companies Honig invest in.

Kesner has advised on the small cap stock industry for years and often shows up as counsel for issuers after Honig has invested with the company. A move that has gone unquestioned by the Securities and Exchange Commission even though a conflict of interest could come up by representing the company and an investor who often holds a debt note against the company.

In the last two years Kesner has also made an apparent move to claim Florida as his home state. Voting records for Kesner started to show up back in December 2016 with an address of a 2 bedroom waterfront condo in Fort Lauderdale, FL. Florida often becomes a home for people with judgments or government fines lobed on them because it is a ‘homestead state’. This means in the case of bankruptcy or say an SEC fine they can’t come and take your home. Kesner will be 61 years old on the planned date of retirement so he still has a few years before any investment pensions can kick in for him. It’s unclear if Honig will keep his business with Kesner’s firm upon retiring or if the law firm will keep Kesner’s name. Why is he retiring now is an unknown and no one at the law firm has responded with comment.

The law isn’t the only thing attorney Kesner makes his money from. There is the stock he he gets on some of the Honig deals. But what’s been a black hole is if a stock transfer company called Equity Stock Transfer benefits him and Honig.

I have previously reported on Harvey’s wife Renee having a 50 percent ownership in the company in 2014 along with a firm called Paradox Capital Partners giving Equity Stock Transfer a loan when it first registered with the Securities and Exchange Commission. EST started in 2011 according to SEC filings called TA-1 and TA-2 reports. In those reports you see Paradox is owned by Kesner and he list himself as its manager. A company called CMBS Document Solutions is also manged by Kesner and listed as maybe providing working capital for the stock transfer company. Additionally in an amended TA-1/A filing from June 6, 2014 it states that Paradox Capital Partners and CMBS Document Solutions could “directly or indirectly, through agreement or otherwise exercise or have the power to exercise control over the management or policies” of the company.

The registered address in Florida for Kesner’s Paradox Capital Partners just happens to be in the same Boca Raton building as Barry Honig uses in his 13g share ownership of Riot Blockchain ($RIOT).

In recent filings we see Kesner put in writing that he doesn’t have control over the firm but only lends the firm money. Equity Stock Transfer’s listed CEO is Mohit Bhansali. Chris Carry at Sharesleuth recently reported on Equity Stock Transfer in his excellent story on Barry Honig and friends ability to make millions on small cap stocks that seem to have questionable rise and falls in their stock. Sharesleuth pointed out that Equity Stock Transfer just happen to be the transfer agent in some these questionable stocks. And as I have reported multiple times Honig is being investigated for a lack of timely disclosure of when he owns a stock and what his true % of ownership is in the stock. Additionally I believe there could be issues of unregistered shares being sold or restricted shares being released when they should be held in restriction. It’s hard to get restricted stock to the DTC for free trading unless you have a friendly transfer agent not doing due diligence on if the shares are legal to trade in the first place.

The Sharesleuth story missed one important point though. While Harvey Kesner has told me through his attorney that he is NOT a control person at Equity Stock Transfer he does have a known relationship with its CEO Bhansali. You see Kesner and Bhansali worked together at Kesner’s previous law firm Haynes and Boone LLP. According to his Linkedin profile Bhansali was at the law firm from 07-09 and list his job as a ‘corporate securities specialist’. I have no idea what that job even means but he is not a lawyer. You also see Bhansali and Kesner serving on a board of a public company Honig invests in called PolarityTE known by its ticker $COOL. The Sharesleuth story did an analysis on the sudden rise and fall of $COOL stock price and Citron Research has published a report calling the company a fraud. Sharesleuth reported:

“He [Bhansali] was a director of Majesco Entertainment until March 2017, the month before it completed its merger with PolarityTE. He also was one of the investors who bought shares and warrants in Riot Blockchain through a private placements last April, when it was still known as Bioptix.”

RIOT Blockchain has admitted it is under SEC investigation after CNBC did a rare investigation into Honig’s investment in the company.

Kesner and Honig have never admitted any control over Bhansali in his role as CEO of Equity Stock Transfer and I’m sure they’d deny it if a regulator asked them but my reporter’s gut feeling thinks it’s very likely Bhansali is a puppet CEO. That issue is hopefully something the SEC or FINRA is currently looking at but then I have also never seen Kesner’s name show up in an SEC subpoena that related to Honig.

I have emailed Kesner asking if he will take an active role in Equity Stock Transfer upon retiring from his law firm and as of press time have not gotten a response. After I originally reported on Equity Stock Transfer in 2016 this publication was hacked and only my story mentioning Kesner, Honig and Equity Stock Transfer was taken down and I lost the reporting. I did hear from a lawyer Kenser hired when the story first came out that went on and on about Kesner not being a control person of this company. They also explained that Kesner’s wife Renee only held a 50% ownership in Equity Stock Transfer for 4 months in 2014 from April 1st to July 3rd.

Editors Note: Donations are needed and very appreciated as stories like these often need to be hosted on a private server with good security so the site doesn’t crash or is not hacked. Good reporting need good donations.