Everett man charged with securities fraud | #phishing | #scams | #education | #technology | #infosec

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Authorities say he allegedly misled investors and misappropriated tens of thousands in proceeds.

The sole officer and director of a Massachusetts marketing firm was charged Friday in connection with misappropriating tens of thousands of dollars of investor funds to pay his personal expenses, according to a statement from acting U.S. Attorney Nathaniel R. Mendell.

Christopher R. Esposito, 55, of Everett, was charged and has agreed to plead guilty to one count of securities fraud, according to the statement. A plea hearing has not yet been scheduled by the court.

According to officials, Esposito served as officer and director of Code2Action Inc., a purported mobile marketing firm.

Between August 2019 and February 2020, Esposito allegedly sold company shares to existing shareholders at sub-penny prices based on material misstatements and omissions and then misappropriated much of the proceeds, according to the statement.

Authorities say Esposito deliberately misled prospective investors about, among other things, Code2Action’s plan and ability to complete a reverse merger, which Esposito touted would enable the investors to sell their shares at a profit.

According to the statement, Esposito allegedly misappropriated over $57,000 to pay his personal expenses and failed to disclose to prospective investors, among other things, that the U.S. Securities and Exchange Commission had previously obtained a final judgment against him for committing securities fraud and barred him from certain securities-related activities. 

The charge of securities fraud provides for a sentence of up to 20 years in prison, three years of supervised release, and a fine of $5 million, according to the statement.

Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

Assistant U.S. Attorney James R. Drabick of Mendell’s Securities, Financial & Cyber Fraud Unit is prosecuting the case.