More Charges Coming for Barry Honig P&D Ring Defendants $MGTI

A defendant in the Barry Honig pump and dump securities fraud case disclosed last week the Securities and Exchange Commission is planing on filing additional charges. On Dec 5, 2019 Robert Ladd, CEO of MGT Capital ($MGTI) received a Wells Notice from the Regulator, which stated the new charges related to disclosure issues in public filings and trading volume.

Senior reporter Bill Meagher also reported on the coming SEC lawsuit for The Deal today. The Deal highlighted the SEC’s recent activity dolling out multiple subpoena’s to the adult sons of Honig’s right hand guy Michael Brauser. Barry Honig plead guilty last year and agreed to a ban on penny stock investing but three members of his crew are still fighting the SEC case along with Ladd the CEO of one of the companies Team Honig invested in and allegedly manipulated. Remaining defendants Michael Brauser, John Stetson, and John O’Rourke were all placed as executives in the manipulated stocks and held controlling board seats, according the SEC. Their control positions gave them the opportunity to force the company to use lawyers, promoters, and transfer agents who are alleged to be in the pocket of Barry Honig. The SEC labeled Honig the ring leader of the scheme in their complaint and Honig’s plead deal says he can not deny their charges publicly.

The Deal‘s story also covers the fact that the new SEC subpoena names individuals who have not been charged by the regulator —yet. This includes Honig’s long time securities transaction lawyer Harvey Kesner and at least four lawyers who worked with him at New York-based Sichenzia Ross Ferance LLP. I was first to report attorney Kesner was leaving the firm, where he was a named partner, just weeks before the SEC charged his client in September 2018.

Letters to the New York federal judge covering the case filed by the SEC and hearings over discovery have disclosed the Regulator also plans to bring another pump and dump case against some of the defendants in a new stock where securities violations occurred after the defendants were charged by the SEC in September 2018. But at a hearing I attended this fall, only Judge Ramos was informed which company it is. This upset defendant Michael Brauser, who through his counsel, argued that the SEC was playing fast and loose with his reputation and wasn’t practicing ethical judicial standards by not disclosing the name of the new stock the SEC was investigating. Judge Ramos ruled at this point the SEC doesn’t have to disclose the company to the defendants.

But a glimpse of who the SEC is focusing on can be seen in a recent subpoena sent to Brauser’s son Ben Brauser. The SEC list 33 companies, which includes Red Violet ($RDVT) and Fluent ($FLNT), that it wants private documented information on. Red Violet and Flint have both seen extreme swings in their stock price in the last year. Ben Brauser filed a motion in South Florid Federal Court to squash the subpoena in November. This was the first time the investing public learned Ben was also working as a securities lawyer for his dad Michael since 2010. Ben, who invested in some of the stocks at the heart of the SEC case, is now trying to say he doesn’t have to turn over everything the SEC is demanding, which includes trading records and emails to stock promoters because he conveniently has attorney client privilege. The lead SEC attorney on the case, Nancy Brown, has fought back and filed a five page letter to the judge arguing why Ben Brauser shouldn’t have attorney client privilege and could have aided his father in his scheme.

Attorney Brown also delivered a one two punch disclosing the names of two other promoters the Regulator was focusing on which includeds: Drew Ciccarelli and David Zazoff along with stock investment advice and promotion companies TSX Ventures, RedChip Investor Relations, Mission IR, Third Coast Media, SmallCap IR, and Stockbeast.

I was first to report for trade publication Growth Capitalist in 2016 that promoter David Zazoff was named in a plea deal statement in a Northern California DOJ criminal case tied to Joe Noel the CEO of YesDTC for taking kickbacks. Noel said it was Barry Honig who directed him to pay Zazoff to run stock promotions without disclosing it.

Recent SEC subpoenas also named 64 people it wanted information on; many of which were not charged in the original September 2018 case. Given the fact that defendants in the SEC case have also admitted in open court to signing tolling agreements with the Dept of Justice, the investing public has been anxiously waiting for the Northern California DOJ to bring their criminal case. Individuals who have already plead guilty in DOJ securities fraud cases and allegedly worked with Team Honig are: Joe Noel, microcap attorney Gregg Jaclin, and promoter Jeff Auerbach who just plead guilty on January 10th. All of these individuals have made plea deals and are assumed to be cooperating with the DOJ in other cases.

It’s also unclear which of the defendants in the original SEC case against Team Honig that have made plea deals with the SEC are now cooperating with the DOJ. Barry Honig, Philip Frost and Mark Groussman could all be singing to the Feds in a move to get less criminal charges or deferred charges.

The coming second amended SEC case could also name new defendants.

Editor Note: Honig attorney Harvey Kesner has sued me and Bill Alpert at Barron’s for our individual reporting on his alleged role in the Honig pump and dump case. I have continued to report on Kesner since he brought his suit and have seen his name come up in a new SEC subpoena since he brought the lawsuit. We are waiting for a federal judge to decided on a motion to dismiss. I stand by all of my reporting on Harvey Kesner. Harvey Kesner has not yet been charged by the SEC but he is being sued for malpractice by one of the companies, MabVax, in the SEC complaint

Private Text shows Michael Serruya could be part of Misleading Aphria SEC Filing: $APHA $GGB

A private text exchange between an Aphria deal lawyer and a member of the board calls into question the accuracy of an regulatory filing with the Securities and Exchange Commission about a bid cannabis company Green Growth Brands made to takeover Aphria. The bid was deemed as ‘hostile’ by Aphria’s board early this year and drew press attention after Aphria’s stock had lost at least half its market share from a short seller report, published the first week of December 2018, questioning the value paid by Aphria for foreign cannabis assets that significantly benefited insiders, like Michael Serruya and Andy Defrancesco, without disclosing the true nature of the transaction. Aphria, who at the time was run by CEO Vic Neufeld, called Serruya an independent director and put him on a special committee to investigate the legitimacy of the Green Growth offer. New information shows Serruya could have used his position to cause the company to make a false and misleading SEC filing.

On February 7, 2019 Tim Kiladze reported for The Globe and Mail that based on a recent regulatory filing, then law firm partner Curtis Cusinato of Canadian-based Stikeman Elliott LLP, had been first to come up with the merger idea and brokered a meeting between the company CEOs and a board member in September 2018. Canadian multi-millionaire Michael Serruya swore in an SEC filing, on February 5 2019, that the timeline of how the Green Growth Brands bid to buy Aphria began was true. But the day The Globe and Mail story came out attorney Curtis Cusinato texted Michael Serruya from a burner phone he used saying the SEC filing didn’t tell the true story and as a result complained The Globe and Mail headline and story were “just plain wrong”.

The Globe and Mail headline read: Aphria’s former legal advisor brokered first meeting with hostile bidder

According to a text message reviewed by this reporter sent on February 7th at 9:45 am attorney Cusinato texted Serruya saying:

“You need to call me – article and your circular is just plain wrong and before that meeting I had never met CEO and CFO they didn’t even know who I was. SE did not broker meeting.”

The message was also reviewed by a person who worked with Serruya and Defrancesco to confirm their belief it was Cusinato sending the message from his burner phone. SE = Stikeman Elliott LLP. Cusinato wanted Serruya to change or clarify the filing because he felt Serruya had used his name and the name of his law firm inaccurately. This reporter confirmed with people that interacted with Cusinato that he was handing out his burner phone number to people on Bay St after the short seller report came out in December because he thought if the government or regulators were going to investigate they wouldn’t try to tap an attorney’s phone because of attorney client privilege.

“Cusinato was absolutely acting panicked at this time”, according to a Bay St source.

Assuming Cusinato is telling the truth, why would Serruya have Aphria lie about how the “hostile bid’ idea happen. Why say a big law firm and its partner lawyer came up with the bid idea? Maybe it was to hid the fact that this was really a backroom plan by insiders who didn’t have the best interest of shareholders in mind?

The Globe and Mail was first to report that Stikeman Elliott and Aphria were going to part ways after the short seller report came out because it found out that Cusinato was also the brother-in-law of Andy Defrancesco who benefited from Aphria over-paying for the foreign assets. Sources on Bay St confirmed Cusinato was actually asked to leave by the firm but allowed to resign publicly to save face. By the time Cusinato had sent the February 7th text he was no longer working for Stikeman. Then on March 6th a smaller Canadian law firm, Bennett Jones, announced they had hired Cusinato as a partner.

Aphria trades on the Canadian exchange TSX and U.S. exchange NYSE. As a result anyone who signs their SEC filings could be subject to SEC enforcement. The Securities and Exchange Act rules say you can not file misleading or untruthful public filings with the Commission especially if it is about a material event like a buy out offer. Serruya’s action could be a technical violation. Additionally it brings into question Serruya’s real independence. Regulators could examine if Serruya and Aphria made misleading statements about his independence that influenced investors decision to buy or sell the stock or vote for the Green Growth Brands bid.

I have previously reported that it was Serruya working with Aphria investor Andy Defrancesco in a backroom deal to engineer the Green Growth offer in a move to try and keep their secret control of the company, based on their own private text messages.

An additional private social media chat message, reviewed by this reporter, says that in early February Green Growth Brands director Adam Arviv was complaining to Andy Defrancesco about spending two hours on the phone with Serruya negotiating the Green Growth deal. It was odd that Arviv wasn’t complaining about negotiation with the Aphria CEO. The private messages are not totally clear what aspect of the deal Arviv was upset about but he did use threatening language when speaking with Defrancesco. The private chat is another example of how people involved in the Green Growth bid thought Serruya was in charge of the “not really hostile” bid. Arviv is the son of Harold Arviv who was accused blowing up his own disco club in the 80’s to get insurance money and also allegedly had ties to the mob. Harold Arviv went to jail in the late 80s.

Cusinato and his prior law firm Stikeman Elliott were contacted about the contents of the text message for comment and did not respond to emails. Michael Serruya has never responded to an email or phone call requesting comment or an interview.

Aphria Board Member Mike Serruya

Editor Note: Aphria’s descriptive timeline of the Green Growth Brands bid starts on page 22 of this SEC filing. Serruya’s signature swearing to the truth of the filing is on page 38. Aphria’s current CEO Irwin Simon also signed the statement.

Shady Colorado CBD company Folium Biosciences described in Lawsuit attempting reverse merger with Australis : $AUSA $AUSAF

A Colorado Springs wholesale CBD company, Folium Biosciences, announced it is going public via a reverse merger with Australis Capital ($AUSA) this week. Australis Capital is a spin-off of Aurora Cannabis ($ACB) a large Canadian cannabis company. I have reported extensively on some troubling behavior of Folium’s CEO Kashif Shan at Cannabis Law Report. This includes allegations of siphoning off company cash to his own family bank accounts, sidestepping regulations and risking employee safety in pursuit of profits, using hot hemp, faking COA reports and even attempting a murder for hire when a former executive left to start a competitive CBD company. Folium is currently battling at least three lawsuits from former executives who alleged Shan cheated them out of ownership in the company that they have contractual rights to. Shan was former mortgage broker who filed bankruptcy during the financial crisis and was sued by the trustee of the bankruptcy for fraudulent conveyance. He started Folium in 2015 under the llc Whole Hemp Company, which is structured as partnership of membership units (not equity).

Folium’s relationship with Scott Dowty of Australis started earlier in the year when Dowty’s company made a $3 million investment into Folium. I have previously reported that Dowty was part of a false and misleading press release that alleged cause the stock price to jump. Dowty is a native of Las Vegas with no previous experience in the cannabis business. Australis is listed on the Canadian Stock Exchange which has weak reporting requirements and trades in the U.S. as a foreign issuer on the OTC Markets ($AUSAF). The stock hasn’t done well since Dowty spun out the company trading under $1. This merger appears to be a last ditch effort for both men to exit their investment.

Folium announced a new llc they set up this year called Folium Equity Holding will merge with a new llc Australis set up called Folium Merger Sub. The agreement was signed on Tuesday December 10. Here is the thing tough, according to people who hold Folium membership units the company didn’t send out a notice for a vote of membership unit holders. To approve a reverse merger with an llc all unit holders have to approve the merger with an unanimous vote and that appears to not have happened.

Additionally, Folium is currently battling a lawsuit that is trying to remove Shan and appoint a receivership to run the company because a membership unit holder is worried he is moving assets out of the company. Any of the three former Folium employee suing could also make a move to file an emergency injunction motion to stop the merger or file a FINCIN complaint with the Securities and Exchange Commission if they think Shan didn’t follow the bylaws of the company in signing the merger deal.

When Kashif Shan first learned that he was going to be personally named in a lawsuit accusing him of taking money out of Folium for personal gain he moved his 5 bedroom, 6 bath, 11,000 square foot home into an llc called Motu llc on August 12th 2019, according to Colorado Springs public records. During the first year of starting Folium, Shan paid $1.4 million for the mansion in 2016. The name of the person running the llc that owns the mansion now is a Denver lawyer from Holland & Hart, David E Crandall who is know for helping individuals manage their wealth and reduce their tax liabilities.

Folium’s Kashif Shan has refused to respond to emails and phone calls requesting comment and the company’s former general counsel Craig Brand appears to be missing from the company and refuses to comment.

Update: I have reported the third part of my investigation into Folium Biosciences at Cannabis Law Report. If you are a former or current Folium employee or investor in the company who wants to speak out about wrong doing you have seen at the company you can contact me anonymously at teribuhl@gmail.com

Folium CEO office poster

This is a poster Kashif Shan had made which use to hang in his office at Folium Biosciences. The caption says “Around this camp their is only one Chief. The rest are Indians.” Shan’s family is from Pakistan and is not Native American.

Defrancesco-Serruya Engineered Green Growth Brands takeover plan of Aphria: $APHA $GGB

Canadian cannabis company Aphria, run by Irwin Simon, continues to tout the narrative that another cannabis company backed by Ohio mega millionaires, the Schottenstein family, made an unsolicited and hostile take over offer of Aphria this January after the company was exposed for alleged corporate disclosure conflicts and overpaying for cannabis assets that were owned by insiders. The news, announced by Aphria ($APHA) when alleged bad actor Vic Neufeld was still listed as the company CEO, caused a run up on the stock whose value had been sliced in half after two investment funds published a detailed and documented report questioning the company’s leadership. Under Simon’s leadership this theme of another cannabis company making a hostile move against Aphria is repeated in profiles highlighting his work as CEO. But new text messages between Andy Defrancesco and Michael Serruya show the Green Growth Brands offer was engineered and designed by Defrancesco and Serruya because they knew the board was going to kick out their friendly CEO Vic Neufeld after fallout from the short seller report. Instead of a “hostile” takeover it should have been described as back-stop by insiders to halt the massive shareholder exodus that the short seller report and follow on media stories were generating.

Green Growth Brands ($GGB), which now basically operates as a shell company, was originally founded by Canadian entrepreneur/investor Adam Arviv, Joseph Schottenstein, and the former COO of Victoria’s Secret Peter Horvath. Schottenstein co-invested with Andy Defrancesco, Michael Serruya and Barry Honig in a deal to obtain cannabis dispensary licences in Ohio, according to state license application records. The investment partnership was called Schottenstein Aphria III LLC. Arviv is a regular co-investor in deals backed by Serruya and Defrancesco like Therapix ($)TRPX, according to internal documents tracking investors in the stock complied by Laidlaw & Co the broker dealer on the IPO. Therapix announced this week it would reverse merge into a CBD subsidiary of Defrancesco’s Sol Global Investments called Heavenly RX. I have previously reported how Andy Defrancesco recently bought a new double digit million Miami home down the street from the Schottenstien’s Miami home.

Text messages from early February 2019 show Andy Defrancesco writing Michael Serruya upset that Irwin Simon, who was chairman of the board at the time, was talking directly with the Green Growth guys.

Andy writes: Daviau and Irwin are talking now. I told Daviau we would handle it- you & I. Have you had time to think about our conversation?”

“I bounded it off Jay this morning and he was fine with it. We’d prefer…would be best to go on the board if you’d invite him to. Also we would want to announce some kind of working relationship in CBD. We should set a deadline to figure this out and don’t want to waste to much of either of our time on it.

[Daviau is Dan Deviau the CEO of Canadian investment bank and broker dealer Canaccord Genuity }

Serruya wrote back: “Irwin and others are bushing back on the Schottensteins and board seat”

Andy writes: “What would you suggest then? Sort of blows up our entire idea if we don’t have all the parties in line.

Serruya doesn’t respond.

Then the next day Andy text Serruya: “Irwin is reaching out to Jay? What’s the story. I told Jay you and I are handling it.”

Andy and Mike appear to be negotiating board seats in this text exchange. Keep in mind Serruya is on the board of Aphria but Andy is not. The tone of the conversation also doesn’t seem hostile. Instead it appears to be a manipulation by Mike and Andy with the help of their friend Jay Schottenstein. This assumes of course the deal was for a price Schottenstein would pay.

According to a person familiar with the transaction Canaccord was hired to make an offer to Aphria so a real transaction was put into play. Adam Arviv of Green Growth Brands has a close working relationship with Canaccord.

When Irwin Simon officially came on as interim CEO of Aphria he made multiple media appearances saying that the Green Growth Brands offer wasn’t a price Aphria was worth. It appears he ended up shutting down the Defrancesco/Serruya plan and in mid April when the company announced the Green Growth Brands offer was off the table.

The text messages obtained by this reporter don’t give us a complete look at how the end of this takeover plan went down. But what is clear is this is another example of how Andy Defrancesco works with Canadian mega millionaire Michael Serruya to influence and control public companies from behind the scenes to benefit themselves before shareholders.

Did Aphria’s Irwin Simon give Selective Disclosure to investor Michael Serruya? $APHA $LHS

Aphria interim CEO Irwin Simon worked a backroom deal to off load the company’s stake in U.S. cannabis investments with Canadian mega million Michael Serruya before he took over the CEO job at the Canadian marijuana company. According to text messages obtained by this reporter between Serruya and Irwin sent on the morning of Feb 6, 2019, Michael Serruya took the lead in speaking for his family and Andy Defrancesco to negotiate the price and timing of when Aphria ($APHA) would exit its stake in Liberty Health Science ($LHS). In December 2018 the Toronto Stock Exchange, where Aphria was listed, forced the company to divest any stake in U.S. cannabis companies because they sold products that were illegal by federal law. Irwin was Chairman of the board at the time but Aphria was run by Vic Neufeld who had made an investment in a special-purpose private company called DFMMJ Investment Ltd for Aphria. DFMMJ managed cannabis farm Chestnut Hill Tree Farm, which was one of only seven licensed dispensaries of medical cannabis in the state of Florida at the time. Chestnut Hill Tree Farm was bought by Liberty Healthy Science.

DFMMJ Investment was first exposed as being secretly set up as an LLC by Andy Defrancesco when two short sellers published a series of reports about self-dealing and a lack of disclosures at Apheria and Liberty Health Science in December 2018. The reports tanked Aphria’s stock. Serruya is a board member of Aphria. I have previously reported, based on text and emails from Serruya, he was also controlling Liberty Health Science and DFMMJ investments from behind the scenes by placing puppet executives in charge.

Instead of selling Aphria’s stake in $LHS on the open market through a broker dealer, where buyers don’t know who is selling, the text messages show a transaction was being set up to benefit the Serruya family fund and Andy Defrancesco.

At 8:14 am Simon Irwin sent a text inviting Serruya to a hockey game. Irwin’s follow-on text said ” wrong person” but “welcome to come”. 50 minutes latter Michael Serruya responded:

Spoke to family member and Andy.
-They are prepared to leave in place what we agreed to, in the event that the shares are sold within the first 6 months.
-if the shares are sold from 6-12 they would pay aphria 3% of the net gain. ie. if during month 6-12 the shares are sold for $1.72 per share, (profit of $64 million), they would pay aphria $1.92 million)
-Alternatively they would be prepared to pay an additional $.02 per share ($0.74 p/s), and make the entire 6-12 month section go away.

An hour latter Irwin texted Serruya “call me”

Later in the day Michael Serruya texted he tried to call. Then at 7:48 pm Irwin texted Serruya “Hey working on getting done”.

The exchange leaves a lot of open questions. First why wasn’t the CEO of the company, Vic Neufeld, speaking to Serruya. Why was Serruya speaking for Andy Defrancesco who was not an officer/board member of Aphria or considered an insider? Did this arrangement constitute Serruya or Defrancesco getting inside information and did they trade off that? Why wasn’t the people involved in this arrangement disclosed in Aphria’s public filings?

On the face of things this read like Aphria is giving selective disclosure, which is against securities law in Canada and the U.S.

On February 19th Aphria made this announcement about offloading $LHS. The public announcement only mentions “a group of buyers” but doesn’t name Serruya or Defrancesco. In February, the company was on a PR campaign to repair its image of buying inflated cannabis assets in LatAm and Jamaica from companies that benefited Andy Defrancesco, Serruya and their buddies. Irwin Simon officially took over the CEO job after Vic Neufeld was kicked out on February 15, 2019.

This week Aphria announced earnings which showed the company is not turning a profit yet from marijuana operations. They also disclosed Michael Serruya will no longer be on the board. According to people I spoke with who work on Bay Street, Serruya is telling people he resigned from the board. I call B.S. on that and think it’s more likely Irwin finally asked him to leave given my story last month that showed how Serruya worked with the head of Canadian broker dealer Clarus to allegedly get inside info and conduct match trades.

Last month I verifed the text messages were written by Irwin when I called the cell phone and he answered. I told him I had copies of his text with Serruya and began to read them to him so he could comment on their intent. He then hung up on me and didn’t let me finish. I texted him saying we need to finish our conversation as the messages could imply insider trading and other things and he immediately answered “I am not worried as there is no truth to this, this never would happen.” Except he didn’t know which text I had.

Michael Serruya didn’t return an email for comment asking about him leaving the board. In fact, Serruya has never responded to any of my requests for comment. He has aggressively been grilling people on Bay street (or anyone he has worked with) trying to find the source of the people who leaked the texts.

The Globe and Mail this week reported Irwin would be getting a $10 million pay package in stock and cash. “Mr. Simon’s arrangement treats him as an independent contractor, paying him $500,000 annually for the CEO job and $600,000 annually to be chairman”, according to the Globe and Mail.

Aphria is still battling a shareholder securities fraud class action lawsuit that names Andy Defrancesco personally as a defendant along with the former Aphria CEO Vic Neufeld.

Barry Honig Secret profit taking of Short Selling publication TheStreetSweeper.org ? $OPK $MGTI

A popular fraud busting stock publication owned by Hunter Adam’s family, TheStreetSweeper.org, allegedly had given an ownership stake to people charged in the SEC’s pump and dump case against Barry Honig in return for an investment in the company. According to documents and communication reviewed by this journalist, written in March 2011, a fund called Contrarian Fund was given a 25% stake in AFB Media which is the registered parent llc for TheStreetSweeper.org. The documents show Barry C. Honig and John Stetson allegedly had ownership in Contrarian Fund. TheStreetSweeper.org published multiple short selling reports in companies like MGT Capital ($MGTI) and Cool Holdings ($AWSM) in which Barry Honig was also a PIPE Investor in at one point. TheStreetSweeper.org disclosed it also held short positions in the stocks it was publishing research on.

Hunter Adams who is on the board of TheStreetSweeper.org is the cousin of Barry Honig according to a person who both men told this to at a lunch meeting. In 2001 Hunter Adams and his brother Gregg Adams where charged criminally on multiple counts of wire fraud and securities fraud for their role in a stock manipulation scheme that was used to raise money for the mob crime family the Gambinos. One of Hunter’s co-defendants in the criminal case is the brother-in-law of Barry Honig; Johnathan Doneson is the husband of Honig’s sister Susan Gayle (Honig) Doneson.

Susan & Johnathan Doneson with brother Barry Honig

In 2010 Hunter did a interview about the start of his publication and the hiring of seasoned business jouranlist Melissa Davis. Davis was an investigative jouranlist for TheStreet.com until she said she was laid off and applied for a job with Adams. Hunter Adams said the publication was funded by his wife Suzanne Adams. California corporate registration filings show Hope Adams (believed to be Hunter’s sister) is the original manager of AFB Media. TheStreetSweeper.org said on its website AFB Media is its parent company. The California registration was then switched to Hunter Adams daughter’s name Sara Adams. In the 2010 interview the company said it wasn’t presently short the stocks they were writing on but they wouldn’t rule out the idea.

Apparently that changed when, according to documents reviewed by this reporter, Barry Honig personally lent $2 million to John Stetson via an LLC John owned with the intent for money to go to Hope Adams. According to a person interviewed by this reporter who had experience working with Honig and was interviewed for the Government investigation against Team Honig, the money was to be used to help start a trading account at a brokerage called Lightspeed. The documents say a fund called Contrarian Fund would own 25% of AFB Media and a member of the Adams family would own the remaining 75%. According to the documents Barry Honig owns 37% of Contrarian Fund. John Stetson is believed to be the manager of Contrarian Fund. The Securities and Exchange Commission accused Barry Honig of hiding over 90% ownership of another fund, called H.S. Contrarian, that was listed in SEC filings as being owned by John Stetson. Honig settled the SEC charges this June and agreed to a penny stock ban of not holding more than a 5% interest.

A review of the TheStreetSweeper.org twitter feed, and cached stories, along with reports republished at Seeking Alpha, TheStreetSweeper.org was very active detailing alleged wrong doing in tons of microcap stocks which led to a drop in the price of the stock. Major media publication like Baron’s and Bloomberg sourced TheStreetSweeper.org reports. Stocks the publication ran short reports on in which Honig also invested are: $RVLT, $MSRT, $MDXG, $HOTR, $AWSM, $MGTI.

TheStreetSweeper.org stated on its website under a section called Public Oath:

Since inception in 2009, The Street Sweeper has alerted the public to hundreds of companies that our research indicates have littered the market with deception, promotions, dilutive shares and shoddy financials that ultimately hurt the little guy.

But the company apparently forgot to mention that Barry Honig and John Stetson were allegedly also profiting from negative research published and the trading profits made by TheStreetSweeper.org after the reports ran and the stock declined.

A document from March 24, 2011 said:

“profits from operations and trading” for the TheStreetSweeper.org would be divided as follows: Hope Adams 50%, Barry Honig 37.5%, John Stetson 12.5%.

Journalist Melissa Davis left TheStreetSweeper.org around 2015. A journalist with little experience writing about securities fraud named Sonya Colberg showed up as taking over the reporting. Colberg had previously reported for Tulsa World. Since the SEC brought their case against Honig in September 2018 TheStreetSweeper.org slowed down the number of reports it ran. The last tweet on a new short report was in August 2019. The report was on United Health Products ($UEEC) and the company is now suing TheStreetSweeper.org for defamation. Honig settled the SEC case over the Summer of 2019. Over the last month since this reporter began asking questions about TheStreetSweeper.org the publication website can’t be reached with a messages saying the site’s bandwidth has been reached. A public records search shows the trademark for thestreetsweeper.org was not renewed in 2018. Sonya Colberg and Hunter Adams did not respond directly to an email for comment sent to streetsweepereditor@yahoo.com on September 13,2019.

In 2013 a hedge fund named Lakewood Capital, run by Anthony Bozza, published a statement questioning the relationship between Barry Honig and Hunter Adams. Lakewood had given a presentation at the Robin Hood stock conference about problems they saw in OPKO Health and Honig’s questionable relationship with the company. Honig and Stetson invested in $OPK, which is run by their co-defendant billionaire Philip Frost. Right after the Lakewood presentation TheStreetSweeper.org ran an out-of-character long report about all the things they thought were wonderful about $OPK. Lakewood also accused Hunter Adams and Barry Honig of being cousins and not disclosing their relationship. According to a person who worked with Honig the Adams family had been given or acquired a ton of stock options in $OPK. The options would be more valuable when the stock went up in price. The Lakewood Capital report is believed to be the first time the The Street got a whiff of how Team Honig operated.

In May 2017, TheStreetSweeper.org ran a critical article on John McAfee selling assets to MGT Capital accusing the company of being pumped with an expectation of a coming dump. They followed up with another story in August 2017 analyzing questionable investments made by MGT. None of the articles mention that John Stetson and Barry Honig were also investors in MGT, which the SEC complaint showed they also benefited from the quick rise of the stock. MGT’s president Robert Ladd is also a co-defendant in the SEC Honig case and is fighting the charges. Ladd didn’t respond to a request for comment about Honig’s alleged investment in TheStreetSweeper.org. You see while Honig invested in MGT Capital he also got really pissed when Ladd pulled out of a deal that would have given Honig a ton of cheap stock warrants in MGT via an invest in a company called DeamonSaw that MGT was going to buy. And Honig sued Ladd and MGT in 2017 around the time TheStreetSweeper.org short reports were coming out. Honig eventually dropped the litigation against MGT according to filings in federal court.

The theory among people interviewed by this reporter who have worked with Honig is TheStreetSweeper.org was used by Honig to help short stocks of the companies he had gotten out of at the top of the pump. (or in the case of $OPKO benefit from long reports) There could be questions on if this would constitute a Reg SHO violation which says investors in PIPE deals can’t also short the stock. The SEC rule was set up because PIPE investors usually cross the Chinese Wall and have access to material non public information of the company they invest in. A PIPE deal is a private investment in a public entity. Based on reporting by this reporter over the last four years it is becoming clear how Honig allegedly made money on every piece of a financial transaction involving publicly traded companies. The government could also be looking at a new set of charges if the Adams family, Honig and Stetson were trading as an undisclosed group of affiliates. I have previously reported the San Francisco DOJ has an open investigation into Team Honig and charges are expected in the near future. The SEC has confirmed the DOJ criminal investigation in court documents filed in federal court.

Yesterday a lawyer from Oakland, California, David Shapiro, who said he represents TheStreetSweeper.org emailed this reporter saying “Barry Honig or any of his LLCs did not have any ownership in TheStreetSweeper.org”. This morning after I obtained additional information showing the plan for Contrarian Fund to be used to invest I asked the lawyer if his client wanted to clarify their statement based on very detailed documented evidence. Attorney Shapiro wrote back says ‘the statements you are making are false and could be considered defamatory’. I responded I am running the story and will use this as their on the record comment. Attorney Shapiro does not represent Barry Honig. An additional email was sent to Honig’s AOL email account asking to comment on his relationship with TheStreetSweeper.org and the alleged profits he received from the short seller reports. Honig did not respond. An email was also sent to John Stetson’s attorney George Conellos at Millbank which was not returned for comment.

Melissa Davis the original editor of TheStreetSweeper.org could not be reached for comment. I have obtained no evidence or testimony that Davis knew about Honig’s alleged role with TheStreetSweeper.org. Sonya Colberg would not answer questions about what she knows about Honig’s alleged involvement. The last time @sonyacolberg tweeted was August 13,2019. Given the evidence obtained for reporting on this story goes back to 2011 there is no clear line of evidence to how long Honig and Stetson allegedly stayed invested in TheStreetSweeper.org.

Hunter and his brother Gregg Adams were ordered to pay $5 million in restitution and fines in their stock manipulation criminal case from 2001. After the criminal case Hunter Adams was broke, according to a person who worked on the case. Barry Honig is also helping his cousins in their house flipping business. Honig and his cousin Gregg Adams were recently sued over one of the rehab home deals in California state court. Honig owns a company called Three Kings of Queens which corporate records show was tied to the Adams family via Suzanne Adams.

UPDATE: 10-9-19: TheStreetSweeper.org and it’s reporter Sonya Colberg were sued in Nevada state court yesterday by one of the companies ($UEEC) it recently published a short report on.

Barry Honig Secretly funded Underwriting in his Laidlaw & Co. Deals: $TRPX

Laidlaw & Co. and Barry Honig, a small cap investor charged by regulators for running a long time pump and dump scheme, worked together to fund the underwriting of firm commitment initial public offerings unbeknownst to main street investors in the IPO’s. According to two senior staffers at Laidlaw, the broker dealer’s clearing firm Sterne Agee stopped honoring their back-stop agreement with Laidlaw in 2016 and wouldn’t put up the net capital needed to sell the small cap offerings. New internal documents given to this reporter show one of the Honig led deals Laidlaw sold is Therapix Biosciences Ltd in which Honig also provided the money for underwriting.

Laidlaw began looking for new clearing firms in 2016 but found that only one other clearing firm, Cor Clearing, was interested in their business–and a due diligence fee of $25,000 per deal would be required before Cor would allow Laidlaw to raise money for any company, according to former Laidlaw employee John Marinaccio. So the firm’s executives, Matt Eitner and Jimmy Ahern, hatched a plan to stay with Sterne Agee and ask Barry Honig to put up the 10% needed to fund the underwriting in the IPO’s he was a lead investor in. According to Laidlaw board minutes from March 6, 2017, Either and Ahern held a quorum of just themselves to approve the loan. Honig used an LLC he owned 94% of called HS Contrarian Investments to make the loan. SEC filings for Therapix say Honig’s co-conspirator in the SEC’s securities fraud case, John Stetson, owns and controls the llc but the SEC says in court filings this is a false statement.

Therapix ($TRPX) is a biopharma company started out of Israel who jumped on the medical marijuana bandwagon during the time of the Laidlaw IPO. The offering was sold for $6 per share. Honig’s long time SEC transaction lawyer, Harvey Kesner, was the lawyer for the IPO. Attorney Kesner is currently being sued for malpractice by one of the victim companies in the SEC enforcement case named MabVax.

Harvey Kesner, Jimmy Ahern, Matt Eitner

After the offering was sold in early 2017, Laidlaw then issued an analyst report giving the stock a buy rating with a price target of $18. The stock had two quick run ups and cliff nose drops since the IPO which could be seen as a pump and dump. Therapix reached a high of $8.94 off its IPO in March 2017 and another high in November 2018 of $8.65. The stock is currently trading below $3 and received a formal warning from NASDAQ about being dropped from the exchange because it wasn’t meeting listing requirements.

A review of Laidlaw financials filed with FINRA show they accepted subordinate loans of $6.25 million in 2016 and $3 million in 2017. HS Contrarian wasn’t the only llc used to fund underwriting in Honig backed deals. Honig also had Mark Groussman and his brother Johnathan Honig use their investment companies to fund some deals, according to a Laidlaw employee who saw internal documents related to the transactions.

Matt Eitner responded to a request for comment saying, “Any public offering that Laidlaw engaged in, including any related documents, as an underwriter have been filed and approved by the appropriate regulatory authorities.”

While Eitner at least had the sense to asked FINRA if they could do the subordinate loans, brokers I interviewed who sold the Therapix offering said they were not told Honig was funding the underwriting and was also investing in the deal. This meant that retail investors were also not informed. Honig secured a group of investing buddies to help him out in what appears to be an undisclosed affiliate group. Laidlaw president Matt Eitner told this reporter, “We always make the appreciate disclosures”. But a current FINRA investigation into Either, Ahern, and Laidlaw shows regulators think otherwise.

Team Honig’s involvement in Therapix was first reported by Chris Carey at Sharesleuth.com.

According to an internal sales and order tracking document for Therapix written by Laidlaw broker Luke Kottke, the $13.7 million raise was 91% funded by Honig and others he trades with as alleged undisclosed affiliates. The document obtained by this reporter shows the investors are: Michael Serruya/Serruya Private Equity, Adam Arviv, Barry Honig/HS Contrarian, Jonathan Honig (Barry’s brother), John Stetson, John O’Rourke/ATG Capital, John O’Rourke Sr., Corey O’Rourke, Andrew Schwartzberg, Iroquois Capital/Richard Abbe, Robert Prag, Adrian James, Roy Langston, Ed Karr,Jason Theofilos, Sean Posner and others. Honig was also able to get a few board seats out of his investment and put Mark Groussman and Eric So on the board. Groussman is a co-defendant in the SEC pump and dump case and has plead guilty. Eric So is also on the board of Riot Blockchain and believed to be one of Honig’s rent-a-directors. Broker Check records for Eric So show he was fired from RBC for multiple violations of personal trading.
If some of these names are not familiar here is how they are related to Honig deals:

– Schwartzberg also was an investor in the April 2017 private placement for Bioptix that preceded its transformation into RIOT. He also invested in the December 2016 Majesco private placement at the time of the PolarityTE agreement, and was an early investor in Marathon Patent.

– Michael Serruya and Barry Honig co invested in land for cannabis farms and dispensary licenses.

– Adam Arviv also was an investor in the Bioptix and Majesco placements, as Acquisition Group Ltd. He was also was a director of Green Growth Brands, and played a role in its “hostile takeover” for Aphria. Text messages, obtained by this reporter, between Adam and Andy Defrancesco and Michael Serruya show they are friends that plan their investments together.

– “Roy Langston” is Ray Langston (full name Charles Raymond Langston III), a longtime Honig investor who was charged with fraud by the SEC in 2013.

– Adrian James is a stock promoter who also got shares in the Bioptix placement – a Honig led deal.

– Robert Prag is a stock promoter who I reported was recently named in a securities fraud suit filed by Mabvax – one of the victim companies in the SEC’s enforcement case against Team Honig. The lawsuit says Prag was paid to promote Mabvax at the insistence of Barry Honig.

– Ed Karr is the current CEO of US Gold Corp. ($USAU). He’s been involved in a number of Honig companies over the years, including Pershing Gold and Majesco. He was a director of Majesco until December 2016, when it agreed to merge with PolarityTE.

– Jason Theofilos was an investor in Bioptix, through JAD Capital. He also was a director and large shareholder of Coinsquare, a Toronto digital currency exchange into which Riot Blockchain invested millions. He also heads MundoMedia, a Toronto digital advertising company in which Barry Honig, Jonathon Honig, Groussman and O’Rourke were investors.

– Sean Posner is believed to be the son of the late Victor Posner, barred by the SEC for fraudulent activities, and whose brother was the late Steven Posner, who also was barred by the SEC. Both were involved with financial felons Ivan Boesky and Michael Milken.

The internal Laidlaw sales tracking document shows the total book for the IPO sold was for $13,720,992 with only $1.2 million coming from Laidlaw’s main street retail customers. Team Honig funded the rest and as the SEC has described in their securities fraud lawsuit this group fits the pattern of an undisclosed affiliate and would have a controlling ownership of the company which was not disclosed. The only disclosure made was John Stetson had a 5.9% ownership. Given we know now that Stetson doesn’t actually own HS Contrarian that ownership statement is now allegedly false. Records show Stetson only invested $600,000 while HS Contrarian invested $1.2 million in the IPO.

Canadian multi-million Michael Serruya, who I reported this month was involved in an investigation by the OSC that included bad boy investor Andy Defrancesco, invested $1.8 million in Therapix. The documents show he was the largest individual investment in the IPO. There were also stock purchases made in the name of Aphria-Colonial Capital of $1.2 million. It’s unclear who owned this investment from the document but a person familiar with the former Aphria CEO says this is Vic Neufeld and Aphria co-founder Cole Cacciavillani’s account. Serruya had made statements to people who work on Bay Street (Toronto’s version of Wall Street) that he was never involved with Barry Honig’s pump and dump scheme but did make investments in companies Honig invested in on the recommendation of Defrancesco and Honig. Defrancesco and Serruya are not named defendants in the SEC enforcement case against Honig.

The internal Laidlaw documents also show a Honig relationship with a South Florida broker dealer called Delaney Equity Group run by David Delaney. The Broker Dealer was charged criminally last year by the Miami DOJ and FINRA revoked their license this year. Employees I spoke to at Laidlaw told this reporter they were often told to send Honig’s shares to Delaney via his account called the Barry and Renee Honig charitable trust. There has been speculation Honig would use shares held at Delaney Equity to trade against the companies he invested in. This ideal was also mentioned in the SEC lawsuit without naming the broker dealer. With the Therapix IPO there was a million dollar worth of shares issued in Barry’s brother’s name, Johnathan, through Delaney Equity. David Delaney was never charged criminally by the DOJ, it’s unclear if he is working was a witness against team Honig in the DOJ’s parallel criminal investigation looking into years of Honig’s group running pump and dump schemes.

Honig settled with the SEC this summer and was banned from trading in penny stocks but is continuing to litigate the amount of fines and restitution he will pay. Honig awaits to see if he will be charged by the Department of Justice.

I have previously reported Laidlaw is under FINRA investigation and the FBI has opened a case investigating the executives at Laidlaw.

Text messages show Cannabis investors Defrancesco & Serruya allegedly Colluded with Clarus Securities’ Christodoulis in Multiple Stocks

A foreign investor in the cannabis sector published a report this week detailing how Andy Defrancesco and a gang of high net worth investors set up complicated private transactions securing dirt cheap stock in the company Sol Global Investments would reverse merge with to become publicly traded. The report only uses research from the cannabis company’s obscure and often confusing financial statements to show Team Defrancesco getting millions of shares of stock at a discount 25 times less than what it was sold to unsuspecting retail investors. To execute the scheme they had to have had help from gatekeepers. New emails and text message obtained by this publication now show enablers such as lawyers, friendly CEO’s, the head of a broker dealer, and a mega millionaire investor collude together to allegedly manipulate multiple stocks, like Sol Global, over the last decade, rape retail investors through self dealing transactions, and possibly trade on inside information.

The investor report goes back to September 2016 when a highly diluted private placement took place with an investment into a cash poor company called Kitrinor Metals led by a “finder” who happen to get 8 percent of the gross proceeds of the offering and discounted warrants. The report says:

While past shareholders paid over $1.2/share, participants of the private placement got them for $0.05 (Common Shares) and $0.10(Warrants) respectively-That’s25x higher.

The author of the report reached out to Sol Global’s current CEO Brady Cobb and ask him to identify the unnamed players in the public filings. Cobb said he answered some of the author’s questions on twitter but Cobb wouldn’t say who the finder was when I wrote him for comment.

According to a person who worked with Defrancesco along with a review of deal documents and press releases that finder is none other than Andy Defrancesco. This means before he became chairman and CIO of Sol Global he was already racking in thousands of dollars to set up a Multi State Operator cannabis company that he knew he was going to control as a public company down the road. Defrancesco became CIO in the fall of 2018 and as I reported early this month was forced out as an officer of the company from negative press. It’s unclear how much of the millions in cheap warrants and stock Defrancesco has retained through multiple llc’s and family members names.

Defrancesco uses some of the discounted warrants and stock by giving them to a trader named Andrew Rudensky. I reported this month Rudensky was named in an OSC investigation and was banned as a broker for two years by Canadian regulator IIROC. Rudensky effectually now works for Defrancesco. On Monday there was an opening run on Sol Global stock ahead of the investors report. The company knew the report was coming out. The stock, which trades on the Canadian Stock Exchange and the OTC Markets, flew up by ten cents without a lot of volume of trading. $Sol.cn $Solcf are the tickers for the stock which has been trading under one dollar. According to a person who worked with Defrancesco, he uses Rudensky to effect trading orders to get the stock up to counter negative press or so Defrancesco and friends can dump their shares.

The investor report goes on to detail other private placements that benefited team Defrancesco at the expense of retail holders. We also see another one of Defrancesco’s enablers helping raise money for the creation of Sol Global (formerly named Scythian Biosciences) which is Clarus Securities run by Jimmy Christodoulis.

Christodoulis, another Canadian, is often rumored to be very close friends with Andy Defrancesco. The broker dealer he runs is a sponsor of Andy’s son’s professional race car team. And now based on a series of text messages I received between Christodoulis, Andy Defrancesco, and mega millionaire investor Michael Serruya we know they are more than just drinking buddies.

Michael Serruya was a major investor in an LLC that Sol Global bought with cash and stock called CannCure, according to a copy of Serruya’s internal documents at his private equity firm, obtained by this reporter, the initial investment was for $22 million. When Defrancesco and Serruya make private investments in the form of debt that turns into common stock there are usually some restrictions to when the stock can be traded. It’s called restricted stock. If they want to get out of the stock earlier than the deal documents or the law requires they would need a lawyer to write a false opinion letter or a broker dealer willing to trade their restricted stock for free trading stock. Both moves are illegal.

According to a group text message from April 26 2018 at 9:37pm, obtained by this reporter, Jimmy Christodoulis, allegedly does this for Defrancesco and Serruya.

Andy Defrancesco texted to Michael Serruya and Jim Christodoulis:

Mike-Jimmy here also
Announce increase from $10 to $20m raise
Clarus 100% manager
They swap FT for restricted for us

Jim Christodoulis texted back:

Understood

FT stands for free trading shares.

Christodoulis and Serruya were made aware of the content of the text messages I obtained yesterday and would not comment on if they colluded to work with Clarus as a broker dealer to raise money in return for swapping out stock. A move that would be viewed as a securities violation by regulators if they can prove the swap stock was made. The text chain doesn’t say which stock they planed to do this with.

I have obtained over a dozen text messages with conversations on separate dates between Michael Serruya and the men he alleged colludes with. A lot of the messages are Serruya complaining to Jimmy and Andy about the price of Aphria and Liberty Health Sciences. Serruya is on the board of Aphria ($APHA) and was an initial investor in Liberty Health Sciences ($LHS). The phone numbers are confirmed as belonging to each man.

On November 8th at 9:48am Serruya text Christodoulis:

If I could convince the aph Board to fire Vic, and get real bankers, the stock will hit $10 today

Christodoulis responds:

Why the fuck are you offering 110k of LHS put loud on the board well below where I’ve already traded 500k shares today
Moron

Defrancesco chimes in

Fucking retards

Serruya responds to Christodoulis and Defrancesco with more F-bombs and then writes:

Weeds up $1.10 and aph is up all of 21 pennies.
I hope the 2 of you, and Vic, get struck by Lightening

The foul mouth locker room talks is central in most of the text messages with the men calling each other faggots, pathetic and morons and then pat each other on the back when one of the stocks they invest does well. The Vic Serruya is referring to is Vic Neufeld, the former CEO of Aphria that was forced to step down this year. Serruya’s nickname for Defrancesco is “self absorbed 3 foot man” and for Christodoulis it’s “Greek angry bastard”. Defrancesco responded in an email to this reporter that he is also called “little man or five foot nothing” by Serruya. Defrancesco says he is 5 foot 4 1/2 inches tall (But apparently he has lied on his drivers licenses because a public records search for over a dozen Broward County, Fla. traffic infractions says he is 5 feet 6 inches).

On October 17 Serruya texted Christodoulis and Defrancesco:

I’m nominating you two faggots for bankers of the year award.
Aphria,
Kalytera,
bkd,
sythian,
Delavaco,
you guys are fucken legends.

The text message exchanges also show Christodoulis talking about a private raise for MedMen and estimating how well it will sell. Serruya also ask Christodoulis for information about a stock called MedReLeaf and Defrancesco chimes in that Serruya needs the info so he can short the stock. MedReLeaf was acquired by Aurora in May 2018.

On October 3rd Christodoulis writes Serruya with Defrancesco included in the text message chain:

Good Morning Michael,
I see you out there on the LHS this am. If it helps I can buy 1mm @ 85c.
Let me know. Thx

Serruya writes back that he is wrong it’s not him in the trade

Christodoulis responds:

I didn’t think it was you but wanted to make sure I let you know just in case
Hope you’re well

The language in this text could be construed as Christodoulis, the head of a large Canadian broker dealer, willing to effect a wash trade for Serruya to help create liquidity in the stock. Wash trades are a securities violation.

Jimmy Christodoulis and Michael Serruya did not respond to my emails for a request for comment on the content of the text message. Defrancesco would not answer questions sent in email except to respond with another disparaging personal message about this reporter and then sent a second email saying No Comment. According to more than one person who has worked with them on Bay St, the men have been calling in people who work with or have worked with them to have their communication equipment checked to see if they are communicating with this reporter.

Update 9.21.19: Andy Defrancesco says he is 5.4 1/2 inches I previously reported he is 4 foot 8 inches.

Editors Note: Given the understanding and past experience that Serruya or Defrancesco threatens people who speak with journalist I am not publishing the actual text messages I have obtained or disclosing sources that sent them. They have been verified with a third party consultant to confirm that are authentic communications. The investor who wrote the analysis quoted in this story has said publicly he did not end up buying Sol Global stock and was not paid to write the analysis. This is the second story in a series of reporting on the internal documents and communications I received. Teribuhl.com is funded by reader donations please consider supporting independent journalism with a donation today.