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SEC Obtains Final Judgment in $1.6 Million Securities Fraud

SEC Obtains Final Judgment in $1.6 Million Securities Fraud. Securities and Exchange Commission, SEC, final judgment, Ponzi scheme, Feloni, Stock Squirrel

The Securities and Exchange Commission obtained final judgments against John Feloni and his company Stock Squirrel Inc. Among other things, the judgments order payment of over $2 million in disgorgement of ill-gotten gains, prejudgment interest, and civil penalties to be paid variously by the two defendants.

In the fall of 2023, the SEC charged Feloni and Stock Squirrel with violating the federal securities laws in a complaint filed in the U.S. District Court for the District of Massachusetts.

The SEC’s complaint alleged that, between at least 2019 and April 2023, Feloni and Stock Squirrel deceived approximately 180 retail investors into giving them almost $2.5 million by claiming that they would use investors’ money for Stock Squirrel’s business, principally by developing a smartphone application offering financial services to the fast-growing youth sector. Instead, according to the complaint, Feloni misappropriated approximately $1.6 million of investor funds – 66% of the total amount raised from investors – for his own use and made Ponzi-like payments to prior investors.

Without admitting or denying the allegations, Feloni and Stock Squirrel consented to the entry of final judgments permanently enjoining them from violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and imposing, on a joint-and-several basis, disgorgement of $1,719,871 and prejudgment interest of $158,839.51.

In the final judgment, Feloni consented to: paying a $223,229 civil penalty; being prohibited from acting as an officer or director of any public company; imposing a penny stock bar; and not participating, directly or indirectly, including but not limited to through any entity he owns or controls, in the issuance, purchase, offer, or sale of any security, or engaging in activities for purposes of inducing or attempting to induce the purchase or sale of any security. The injunction fell short, however, of preventing Feloni from purchasing or selling securities for his own personal account.

 

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