Long-time readers of this blog will likely recall The Bull Exchange and related websites. They allegedly stole AwesomePennyStocks’ email list and APS sued them for that back in 2012. That case was MARKETING INTEGRALE CO. v. Roberson (4:12-cv-00880) in US District Court of the Southern District of Texas. See case docket on Court Listener. That case was dismissed by Marketing Integrale. The Bull Exchange websites also had a number of quite successful (in terms of price action and volume) stock promotions in 2011 and 2012. There have been a number of civil and criminal cases involving various people who were associated at one point or another with The Bull Exchange group or with companies they promoted.
On September 29, 2016 the SEC sued Dino Paolucci, who ran TheBullExchange.com and other promotional websites, and his associates that aided the manipulation and promotion, in U.S. SECURITIES AND EXCHANGE COMMISSION v. BUONOCORE (2:16-cv-05176), in US District Court, Eastern District of Pennsylvania. See case docket at Court Listener. Read the SEC’s complaint (pdf). Also charged in the SEC’s lawsuit were Jeremy R. Draper, Louis T. Buonocore, Frank J. Morelli III, and Don L. Rose. Paolucci was named in the suit as Bernardino “Dino” Paolucci, Jr. The SEC suit related to the promotion and manipulation of Ecoland International Inc. (OTC: ECIT), which if I recall correctly was The Bull Exchange’s first stock promotion (or at least first successful stock promotion).
Buonocore, Morelli, and Draper consented to judgments against them. The SEC won a default judgment against Paolucci. Don Rose later consented to a judgment against him that was entered November 30, 2017. All the judgments included the normal SEC ‘obey the law’ injunctions. The final judgments against all defendants but Rose were entered on August 10, 2017 (docket 48-51) . The final judgment against Rose was entered on May 24, 2018. The defendants were found liable for disgorgement and prejudgment interest and civil penalties in the following amounts: Don L. Rose ($1,052,817.97 disgorgement/interest & $914,249.56 civil penalty), Dino Paolucci ($2,366,692.50 disgorgement/interest & $2,050,000.00 civil penalty), Frank J. Morelli III ($183.368.47 disgorgement/interest & $158,700.00 civil penalty), Buonocore ($227,083.54 disgorgement/interest & $200,000.00 civil penalty), and Draper ($17,462.31 disgorgement/interest & $15,000.00 civil penalty). The following defendants also received permanent penny stock offering bars: Jeremy Draper, Dino Paolucci, and Don Rose.
On December 8, 2016 Dino Paolucci was charged in a sealed criminal indictment in United States v. PAOLUCCI (2:16-cr-00503) in US District Court, Eastern District of Pennsylvania. See case docket. Read the original indictment from 2016 (pdf) and the superseding indictment (pdf) that was filed on December 13, 2018. The case was unsealed on August 20, 2018. Stocks that Paolucci was alleged to have manipulated and promoted in the indictment include Ecoland International (OTC: ECIT; later traded as OTC:NRBT), Refill Energy (OTC: REFG), YaFarm Technologies (OTC: YFRM), Resource Ventures (OTC: REVI), Crown Marketing (OTC: CRWN), and LiveWire Ergogenics (OTC: LVVV). The indictment was unsealed on August 20, 2018. Paolucci was the only one criminally charged in this case, although as mentioned in the indictment, Louis Buonocore and Frank J. Morelli, III were criminally charged for other stock promotions (see below). Paolucci pleaded guilty to four counts (counts 22-25) on September 9, 2019. The government dismissed the remaining counts and Paolucci was sentenced to 84 months in prison on December 10, 2019. He was also ordered to forfeit $2,000,000 (pdf).
Morelli was criminally charged on May 17, 2014 via information in United States v. MORELLI (2:14-cr-00129) in US District Court for the Eastern District of Pennsylvania. See case docket and information (pdf). That case involved the manipulation and promotion of Super Nova Resources (OTC: SNRR), which occurred in 2008-2009 (prior to TheBullExchange.com). Morelli pleaded guilty and was sentenced to 84 months in prison on July 10, 2018. Buonocore was criminally charged along with five other men in a separate case also involving Super Nova Resources (OTC: SNRR). That case, United States v. MARCINIAK (2:14-cr-00133) in US District Court, Eastern District of Pennsylvania, was filed on March 18, 2014. See case docket and indictment (pdf). Buonocore was dismissed from that case on October 16, 2018 after he died.
Louis Buonocore was also charged in a separate criminal case for actions relating to YaFarm Technologies (OTC: YFRM), another Bull Exchange stock promotion. That case is United States v. Buonocore (1:15-cr-10272) in US District Court for the District of Massachusetts. See case docket and information (pdf) with which Buonocore was charged. See the Department of Justice PR announcing the charges. Parallel to that criminal case, both Buonocore and Frank J. Morelli, III were sued by the SEC on September 21, 2015. That case was Securities and Exchange Commission v. Morelli (1:15-cv-13396) in US District Court, District of Massachusetts. See case docket and complaint (pdf). The SEC won judgments against both men but elected not to pursue penalties because Louis Buonocore died and Morelli was sentenced to prison in the criminal case described in the previous paragraph.
For more on Dino Paolucci getting sentenced to prison, read Mike Caswell’s article on StockWatch (requires free sign-up to read full article). One interesting point that Caswell brings up is the possibility that Paolucci cooperated:
The sentence is the product of some sort of plea negotiations, the details of which are unclear. All of the materials leading up to Mr. Paolucci’s sentencing are not part of the public court file. Also hidden from the public is his plea agreement. These documents would usually set out the jail term that prosecutors sought and would set out any co-operation that Mr. Paolucci provided.StockWatch article by Mike Caswell
It is entirely possible that Mr. Paolucci provided assistance to the government. Generally, plea agreements in fraud cases specify that a defendant must co-operate with the government, and in some instances the government’s sentencing recommendation is directly linked to that co-operation. Given that many of Mr. Paolucci’s associates were separately charged, prosecutors could have been very interested in his assistance.
While the factors that led to Mr. Paolucci’s jail term are not clear, the size of the forfeiture order indicates that he had earned at least some favour with prosecutors. When he was initially charged, the government calculated his gains from the scheme to be $8.4-million. Prosecutors previously stated their intention to seek the forfeiture of the full amount. Tuesday’s sentence only includes $2-million in forfeiture, however.
One last note: according to the Dino Paolucci indictment, 3 million ECIT shares were sold using an account Rose opened in the name of his company Global Media at defunct broker Spencer Edwards. Shares were also sold using offshore broker Clear Water Securities (per the SEC complaint). Neither Spencer Edwards nor Clear Water Securities were charged in any of the above cases. Clear Water Securities shut down after being sued by the SEC in 2015. That case is Securities and Exchange Commission v. Caledonian Bank Ltd. (1:15-cv-00894) in US District Court, S.D. New York. See case docket and complaint (pdf). The SEC won a final judgment (pdf) against Clear Water Securities.