The Securities and Exchange Commission announced today that on July 20, 2012, it filed a civil fraud action against former Connecticut resident Jerry S. Williams, a stock promoter, and two companies that he controlled, Monk’s Den, LLC and First In Awareness, LLC. The Commission charged Williams with running a scalping scheme from which he made over $2.4 million. Scalping is a type of fraud in which the owner of shares of a security recommends that security for investment and then immediately sells it at a profit upon the rise in market price which follows the recommendation.
The Commission’s Complaint alleges that from at least early 2009 through at
least the end of 2010, Williams recommended two stocks, Cascadia Investments,
Inc. and Green Oasis Environmental, Inc., to a large group of potential
investors who followed his trading recommendations and strategies. According to
the Complaint, Williams, who was known to his followers as “Monk,” used his
internet-based message board (called “Monk’s Den”), in-person seminars (called
“Monkinars”), and other means to encourage people to buy, hold, and accumulate
Cascadia and Green Oasis stock. In particular, the Complaint alleges that
Williams told potential investors that by buying up the outstanding shares, or
float, of these companies, they could collectively trigger a “short squeeze”
that would allow them to sell their stock to “market makers” that had shorted
the stock. The Commission’s Complaint alleges that Williams falsely stated that
he had previously used this strategy to make himself and others enormous
profits. The Complaint alleges that in fact, unknown to potential investors,
Williams had been hired by Cascadia and Green Oasis to promote their stock and
had been compensated with millions of free and discounted shares of these
stocks. According to the Complaint, Williams secretly sold millions of Cascadia
and Green Oasis shares at the same time he was encouraging potential investors
to buy, hold and accumulate these stocks. Through this scheme, the Complaint
alleges, Williams made over $2.4 million.
The Commission’s Complaint charged Williams, First In Awareness, LLC and
Monk’s Den, LLC with violating Section 10(b) of the Securities Exchange Act of
1934 and Rules 10b-5(a), (b), and (c) thereunder. The Commission also charged
Williams with violating Sections 17(a)(1), 17(a)(2), 17(a)(3) and 17(b) of the
Securities Act of 1933 and Sections 206(1) and 206(2) of the Investment Advisers
Act of 1940. The Commission is seeking permanent injunctions, disgorgement,
prejudgment interest, and civil penalties against each defendant and, as to
Williams only, a penny stock bar.
The Commission’s investigation is continuing.