Business · May 29, 2021

SEC – Final Judgement Against Microcap Fraud Scheme

SEC Obtains Final Judgment Against Defendant in a Microcap Fraud Scheme Attempting to Capitalize On the Covid-19 Pandemic

(STL.News) On May 26, 2021, the U.S. District Court for the District of Massachusetts entered a final judgment against defendant Michael Luckhoo-Bouch in a previously filed action against 11 defendants alleging a fraudulent scheme that generated more than $25 million from illegal sales of multiple microcap companies’ stock.

According to the Commission’s complaint, beginning around January 2018, Canadian citizen Nelson Gomes, working with Canadian citizen Luckhoo-Bouch and others, ran a fraudulent business through which corporate control persons could conceal their identities while illegally dumping their company’s stock into the market for purchase by unsuspecting investors.  The complaint alleged that these illegal stock sales were often boosted by promotional campaigns that, in some instances, included false and misleading information designed to fraudulently capitalize on the COVID-19 pandemic, such as false claims that a company being promoted could produce medical quality facemasks.  The complaint further alleged that Luckhoo-Bouch facilitated Gomes’ and others’ illegal sales by serving as the nominal director of a company, which allowed corporate control persons to conceal their identities, and also by making misrepresentations that facilitated the fraudulent scheme.

On December 4, 2020, the U.S. District Court for the District of Massachusetts entered final judgments by default against five of the entity defendants that ordered them, among other things, to pay a total of $12,895,750 in civil penalties, disgorgement, and prejudgment interest.

Without admitting or denying the allegations in the SEC’s complaint, Luckhoo-Bouch consented to the entry of a final judgment enjoining him from violating the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933 and the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and ordering him to pay a $20,000 civil penalty.  In addition, Luckhoo-Bouch consented to a 5-year penny stock bar.

The SEC‘s ongoing case against the other defendants is being handled by Trevor Donelan, Eric Forni, Kathleen Shields, J. Lauchlan Wash, and Amy Gwiazda in the Boston Regional Office.