SEC charges cold-caller, his firm with defrauding investors who bought penny stock

Long Island-based group was being paid to promote the stock

Aug 21, 2018 @ 2:53 pm

By Sarah Min

The Securities and Exchange Commission charged Eric P. Lesak and Global Research in Pennsylvania and New York with securities fraud. They promoted shares of a penny stock company, Axiom Holdings Inc., resulting in losses of more than $2.3 million.

From December 2015 to June 2017, the defendants pitched Axiom stock to more than 100 investors who purchased more than 1.9 million shares of stock for approximately $2.8 million.

Mr. Lesak and Global Research did not tell prospective investors that they were being paid thousands, and even tens of thousands, of dollars each month to promote the stock.

(More: How a hacker led to Finra censuring and fining a broker-dealer)

Mr. Lesak and Global Research could not be reached for comment.

According to the complaint, Mr. Lesak personally bought and sold thousands of shares of Axiom stock in hundreds of transactions to help create the appearance of a market. These made little economic sense and resulted in losses for Mr. Lesak.

(More: SEC charges five unlicensed salespeople in Woodbridge Ponzi)

Mr. Lesak and Global Research also failed to disclose to prospective investors that Mr. Lesak had been barred and his registration suspended by the National Association of Securities Dealers. In 2013, Mr. Lesak pleaded guilty and was convicted of both securities fraud and wire fraud related to securities transactions.

The SEC is seeking permanent injunctions, disgorgement, and prejudgment and post-judgment interest and civil monetary penalties. The regulator also prohibited Mr. Lesak from participating in any offering of penny stocks.

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