On July 19th, the SEC unveiled a lawsuit against Garrett M. O’Rourke and Michael J. Black for alleged boiler-room pumps and dumps in the shares of three OTC stocks: EnviroTechnologies International Inc (ETII), AV1 Group (AVOP), and Cyberfort Software Inc (CYBF). Read the complaint (pdf). The lawsuit is 1:19-cv-04137 in the Eastern District of New York.
The Justice Department also filed criminal charges against Garrett M. O’Rourke for the AVOP promotion. He was arrested and then released on $1 million bond. Read the criminal complaint (pdf). The case is 1:19-mj-00644 in the Eastern District of New York. There is a second person named in the criminal complaint but that person’s name is currently redacted. However, given the information in the SEC complaint and the fact that the name “BLACK” shows up twice in the criminal complaint (without Black’s full name showing up), I conclude that Michael J. Black is the second defendant named in the indictment. Below are two excerpts from the complaint that mention “BLACK”:
Quartz has an excellent overview on the allegations and charges.
From the DoJ press release:
According to court filings, between April 2016 and June 2017, O’Rourke engaged in a securities fraud conspiracy to mislead investors into purchasing shares of AVOP by claiming, among other things, that he and his co-conspirators worked for Marketwise Report, a purported investment advising firm located in Florida that offered stock advice to clients. In reality, O’Rourke and his co-conspirators did not work for this fictitious entity and instead worked in call rooms based in Florida and Medellin, Colombia. O’Rourke and his co-conspirators made misrepresentations and false statements to induce investors to purchase and retain AVOP stock in order to profit for themselves. By persuading numerous investors to purchase AVOP stock, O’Rourke and his co-conspirators were able to “pump” AVOP’s stock price. Then, once the stock price had artificially increased, a co-conspirator “dumped” over $2 million in shares at the artificially inflated prices and shared the profits from the sale with O’Rourke and other co-conspirators.
The criminal complaint mentions a cooperating witness (“CW1”).
Below are charts of the three companies mentioned in the SEC lawsuit, showing the period during which they were promoted.
ETII February 2017 to August 2017
AVOP May 2016 to September 2017
CYBF June 2018 to October 2018