SEC Charges Auctus Fund Management LLC and Its Co-Owners, Louis Posner and Alfred Sollami, with Acting as Unregistered Securities Dealers
On June 1, 2023, the Securities and Exchange Commission (the “SEC”) announced charges against Auctus Fund Management, LLC (“Auctus Management”) and its co-owners Alfred Sollami of Brookline, Massachusetts and Louis Posner of Mansfield, Massachusetts, for failing to register as securities dealers with the SEC.
Auctus Management, Sollami, and Posner allegedly bought and sold billions of newly-issued shares of microcap securities through their fund Auctus Fund, LLC (“Auctus Fund”), generating millions of dollars in profit, without registering as dealers or associating with a registered dealer, as required by the federal securities laws.
The SEC’s complaint, filed in federal district court in Boston, Massachusetts, alleges that from 2013 through 2021, Auctus Management, Sollami, and Posner engaged in the business of purchasing convertible notes and associated warrants from microcap issuers, converting the notes into shares of stock at a large discount from the market price, and selling those newly issued shares into the market at a significant profit.
Auctus Management, Sollami, and Posner allegedly purchased through Auctus Fund notes from more than 150 separate issuers and sold more than 60 billion shares of newly issued stock into the market, generating gross stock sale profits of over $100 million between 2017 and 2021 alone.
As alleged, Auctus Management, Sollami, and Posner failed to register as securities dealers with the SEC or associate themselves with a registered dealer, in violation of the mandatory registration provisions of the federal securities laws. By failing to register, Auctus Management, Sollami, and Posner avoided certain legal obligations for securities dealers that govern their conduct in the marketplace and protect the investing public, including regulatory inspections and oversight, financial responsibility requirements, and maintaining books and records.
According to the SEC, Sollami joined Posner at Auctus Management in 2013, becoming a 51% owner. FINRA records show that Sollami was a registered broker from 1991 to 2016, including 13 years with Summer Street Capital Partners (2003 – 2015), where he held the position of Chief Executive Officer. Summer Street (aka Custom Equity Research Partners LLC) used the same address and nearly identical phone number as Auctus Management and Auctus Fund when it was active. The firm was closed in 2015 after FINRA initiated an investigation into the firm’s part in providing underwriting services for an unregistered Temporary Secured Demand Note. One of its brokers, Cyrus M Alphonse, was suspended by FINRA for the infraction in 2017. According to the FINRA action, Alphonse failed to properly supervise convertible note transactions done by Sollami (referred to as AS in the document) through an outside business [Auctus Management] with more than 18 issuers, resulting in the sale of over 2 billion public shares for over $1 million in proceeds, in violation of NASD Rules 3040 and 3010 and FINRA Rule 2010.
Posner was also a registered broker from 1993 to 2015, the last 6 years of which was at Summer Street (2009 – 2015). Before founding Auctus Management and Auctus Fund in 2008, Posner spent about 7 years from 2001 – 2008 with Dutchess Advisors LLC as the VP of Corporate Finance. Dutchess provided financing to dozens of public issuers during that time. The principal of Dutches Advisors at the time, Douglas Leighton, was charged by the SEC in 2020 for a scheme in which he allegedly acquired discounted shares in MassRoots Inc, knowingly failed to disclose his holdings and sales, and manipulated the public market for those shares. Leighton, two entities he controlled, and six investors he directed agreed to settlements ordering them to pay nearly $1.5 million in civil penalties, disgorgement, and prejudgment interest. After Sollami joined Posner at Auctus Management in 2013, Posner’s ownership in the entity was reduced to 49%.
Searching through SEC filings, we were able to identify more than 200 issuers that did deals with the Auctus family of companies between 2008 – 2020, including:
- WRIT Media Group Inc (WRIT)
- Feel Golf Co Inc (fka FEEL)
- CRC Crystal Research Corp (fka CYSA)
- Sea Valley Capital Corp (SEVA)
- Capital Reserve Canada Ltd (fka CRSVF)
- USA Real Estate Holding Co (USTC)
- Island Breeze International Inc (fka IBII)
- Smart Kids Group Inc (fka SKGP)
- Revolutions Medical Corp (fka RMCP)
- Digital Town Inc (DGTW)
- Insight Management Corp (fka ISIM)
- Cyios Corp (CYIO)
- Sunvalley Solar Inc (SSOL)
- Eagle Oil Holding Company Inc – Now Green Stream Holdings Inc (GSFI)
- Green Energy Live Inc (fka GELV)
- InoLife Technologies Inc – now Bitcoin Generation Inc (BTGN)
- Incoming Inc (ICNN)
- Winchester International Resorts Inc (fka WNCH)
- Solanbridge Group Inc (SLNX)
- Exergetic Energy Inc (fka XNGR)
- Evcarco Inc (fka EVCO)
- Monster Arts Inc (APPZ)
- Steele Resources Corp – now Steele Oceanic Corp (SELR)
- Electronic Control Security Inc (EKCS)
- Coastal Pacific Mining Corp (fka CPMCF)
- ImmunoCellular Therapeutics Ltd (IMUC)
- StrikeForce Technologies Inc (SFOR)
- Aqualiv Technologies Inc – now Veriy Corp (VRTY)
- ScripsAmerica Inc (SCRCQ)
- Bergio International Inc (BRGO)
- Eco-Tek Group Inc (ETEK)
- Green Automotive Co (GACR)
- First Liberty Power Corp (fka FLPC)
- VizConnect Inc (VIZC)
- Coates International Ltd (COTE)
- Rich Pharmaceuticals Inc (RCHA)
- Positive ID Corp (fka PSID)
- SearchCore Inc – now Wisdom Homes of America (WOFA)
- Codesmart Holdings Inc (fka ITEN)
- iHookup Social Inc – now Friendables Inc (FDBL)
- Blue Water Global Group Inc (fka BLUU)
- APT Motovox Group Inc (MTVX)
- Il2m International Corp (ILIM)
- Hangover Joe’s Holding Corp (fka HJOE)
- Alkame Holdings Inc (ALKM)
- Pazoo Inc (PZOO)
- Amazonica Corp – now xFuels Inc (XFLS)
- Sanomedics International Holdings Inc (fka SIMH)
- FastFunds Financial Corp (fka FFFC)
- Elray Resources Inc (ELRA)
- Xun Energy Inc (fka XNRG)
- Eyes on the Go NY Inc (AXCG)
- The Directory.com Inc (SEEK)
- Trans-Pacific Aerospace Company Inc (TPAC)
- Boreal Water Collection Inc (fka BRWC)
- Rx Safes Inc – now GeneSYS ID Inc (GNID)
- 4Cable TV International Inc (CATV)
- First Colombia Gold Corp (FCGD)
- Yappn Corp (YPPN)
- Ambicom Holdings Inc (fka ABHI)
- Cannasys Inc (MJTK)
- Flasr Inc (fka FLSR)
- Force Protection Video Equipment Corp (FPVD)
- EMAV Holdings Inc (fka EMAV)
- Graphite Corp (fka GRPH)
- Max Sound Corp (MAXD)
- Aim Exploration Inc (AEXE)
- Cherubim Interests Inc (CHIT)
- Carolco Pictures Inc – now FuboTV Inc (FUBO)
- Zonzia Media Inc (ZONX)
- FreeSeas Inc (FREEF)
- Fonu2 Inc (FUNO)
- CardioGenetics Holdings Inc (CGNH)
- Cardinal Energy Group Inc (fka CEGX)
- Resonate Blends Inc (KOAN)
- Endonovo Therapeutics Inc (ENDV)
- Galenfeha Inc (GLFH)
- MyDx Inc (MYDX)
- ABCO Energy Inc (ABCE)
- Clean Energy Technologies Inc (CETY)
- EcoSciences Inc (ECEZ)
- Ami James Brands Inc (fka AJBI)
- Mix 1 Life Inc (MIXX)
- Michael James Enterprises Inc (MJTV)
- Lans Holdings Corp (fka LANS)
- Grow Capital Inc (GRWC)
- Joey New York Inc (JOEY)
- Futureland Corp (FUTL)
- Bemax Inc (BMXC)
- Simlatus Corp (SIML)
- JPX Global Inc (JPEX)
- Phi Group Inc (PHIL)
- Lingerie Fighting Championships Inc (BOTY)
- Daniels Corporate Advisory Company Inc (DCAC)
- ERHC Energy Inc (ERHE)
- Elite Group Inc (ELTZ)
- Applied Energetics Inc (AERG)
- GH Capital Inc (GHHC)
- 2050 Motors Inc (EFTM) (now Fomo Worldwide Inc)
- DSG Global Inc (DSGT)
- Atacama Resources International Inc (ACRL)
- Momentous Entertainment Group Inc (fka MMEG)
- Lord Global Corp (LRDG)
- Omni Shrimp Inc (OMSH)
- Reliance Global Group Inc (RELI)
- Petrone Worldwide Inc (PFWIQ)
- Alliance BioEnergy Plus Inc (ALLM)
- IDDriven Inc (IDDR)
- Arias Intel Corp (ASNT)
- NightFood Holdings Inc (NGTF)
- Sealand Natural Resources Inc (fka SLNR)
- Green Envirotech Holdings Corp (GETH)
- HPIL Holdings (HPIL)
- Flitways Technology Inc (FTWS)
- Virus International Inc (VRUS)
- Code Green Apparel Corp (fka CGAC)
- Zenergy Brands Inc (ZNGYQ)
- Appyea Inc (APYP)
- SunStock Inc (SSOK)
- Imagine Inc (OMAGQ)
- Grey Cloak Tech Inc (GRCK) (now Healthy Extracts Inc)
- Airborne Wireless Network (ABWN)
- Progreen US Inc (PGUS)
- PetLife Pharmaceuticals Inc (PTLF)
- Magellan Gold Corp (MAGE)
- Las Vegas Xpress Inc (LVXI)
- Sincerity Applied Materials Holdings Corp (SINC)
- Exactus Inc (EXDI)
- Verb Technology Company Inc (VERB)
- SoOum Corp (fka SOUM)
- Poverty Dignified Inc (PVDG)
- Inception Mining Inc (IMII)
- MMEX Resources Corp (MMEX)
- BRK Inc (BRKK) (now Gen 2 Technologies Inc)
- All For One Media Corp (AFOM)
- REAC Group Inc (REAC)
- Guided Therapeutics Inc (GTHP)
- BrewBilt MFG Inc (BBRW)
- View Systems Inc (VSYM)
- Sunset Island Group Inc (SIGO)
- Bantec Inc (BANT)
- HealthLynked Corp (HLYK)
- Vilacto Bio Inc (VIBI)
- Redhawk Holdings Corp (SNDD)
- Global Entertainment Holdings Inc (GBHL)
- Sector V Inc (SFIV)
- Sauer Energy Inc (SENY)
- 12 Retech Corp (RETC)
- OriginClear Inc (OCLN)
- Blue Sphere Corp (BLSP)
- Sun Pacific Holding Corp (SNPW)
- New Bridge Global Ventures Inc (NBGV)
- Regen Biopharma Inc (RGBP)
- Yangtze River Port and Logistics Limited (YRIV)
- Can B Corp (CANB)
- CleanSpark Inc (CLSK)
- Redwood Scientific Technology Inc (RSCI)
- Drone Guarder Inc (DRNG)
- DarkPulse Inc (DPLS)
- Spirits Time International (SRSG)
- FTE Networks Inc (FTNW)
- Nuo Therapeutics Inc (AURX)
- Ironclad Encryption Corp (IRNC)
- Global Digital Solutions Inc (GDSI)
- Beyond Commerce Inc (BYOC)
- DigitalTown Inc (DGTW)
- Mitesco Inc (MITI)
- Bioxytran Inc (BIXT)
- Cerebain Biotech Corp (CBBT)
- KinerjaPay Corp (KPAY)
- BioRestorative Therapeutics Inc (BRTXQ)
- NanoFlex Power Corp (OPVS)
- Ozop Surgical Corp (OZSC)
- JRSIS Health Care Corp (JRSS)
- THC Therapeutics Inc (THCT)
- Digerati Technologies Inc (DTGI)
- Visium Technologies Inc (VISM)
- Optec International Inc (OPTI)
- Hemp Naturals Inc (HPMM)
- Natural Health Farm Holdings Inc (NHEL)
- TPT Global Tech Inc (TPTW)
- Players Network (PNTV)
- Anvia Holdings Corp (ANVV)
- BoxScore Brands Inc (BOXS)
- PCT Ltd (PCTL)
- Nestbuilder.com Corp
- Data 443 Risk Mitigation Inc (ATDS)
- Blackstar Enterprise Group Inc (BEGI)
- Two Rivers Water & Farming Company (TURV)
- Grapefruit USA Inc (GPFT)
- IQSTEL Inc (IQST)
- uBid Holdings Inc – now RDE Inc (RSTN)
- Generex Biotechnology Corp (GNBT)
- Ethema Health Corp (GRST)
- ProPanc BioPharma Inc (PPCB)
- Ngen Technologies Holdings Corp (NGRP)
- Tech Central Inc (TCHC)
- American Battery Metals Corp (ABML)
- Bergio International Inc (BRGO)
- Mexus Gold US (MXSG)
- Quad M Solutions Inc (MMMM)
- Quantum Computing Inc (QUBT)
- C-Bond Systems Inc (CBNT)
- AB International Group Inc (ABQQ)
- Blow & Drive Interlock Corp (BDIC)
- Right on Brands Inc (RTON)
- Pharmagreen Biotech Inc (PHBI)
- LGBTQ Loyalty Holdings Inc (LFAP)
- Verde Bio Holdings Inc (VBHI)
- Brain Scientific Inc (BRSF)
- NaturalShrimp Inc (SHMP)
- Maptelligent Inc (MAPT)
- The Marquie Group Inc (TMGI)
- Kempharm Inc (KMPH)
- Xeriant Inc (XERI)
- Omnia Wellness Inc (OMWS)
- Home Bistro Inc (HBIS)
- 4Less Group Inc (FLES)
- FOMO Corp (FOMC)
- Barrel Energy Inc (BRLL)
- Water Now Inc (fka WTNW)
- Global Fiber Technologies Inc (GFTX)
- Nugene Group Inc (NUGN) (now Livento Group Inc)
- Major League Football Inc (MLFB)
The transactions with the later 148 issuers on the list occurred from 2016 – 2021 after Posner and Sollami were no longer registered brokers with FINRA.
The SEC’s complaint charges Auctus Management, Sollami, and Posner with violating Sections 15(a)(1) and 20(b) of the Securities Exchange Act of 1934. The SEC seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, civil penalties, and penny stock bars, and other equitable relief. The complaint also names as a relief defendant Auctus Fund, and seeks disgorgement from Auctus Fund of ill-gotten gains from Auctus Management, Sollami, and Posner’s violations.
To speak with a Securities Attorney, please contact Brenda Hamilton at 200 E Palmetto Rd, Suite 103, Boca Raton, Florida, (561) 416-8956, or by email at [email protected]. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as and does not constitute legal advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
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Brenda Hamilton, Securities Attorney
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Boca Raton, Florida 33432
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