SEC Obtains Final Judgment Against Kevin Dills – Joseph Padilla Sentenced in Criminal Case
On March 19, 2024, the U.S. District Court for the District of Massachusetts entered final judgments against California resident Kevin C. Dills and two entities that Dills controlled, Bright Star International, Inc. and Life Sciences Journeys, Inc. In June 2023, the SEC charged Dills and Joseph A. Padilla for their roles in a fraudulent stock-selling scheme.
According to the complaint, Padilla engaged in a fraudulent scheme for his own benefit and also on behalf of individuals who paid Padilla to arrange illegal stock sales. The complaint alleges that those individuals hid their identities by selling stock through offshore accounts in different names that Padilla arranged.
From early 2020 into 2022, Dills allegedly conspired with Padilla to sell stock of Oncology Pharma, Inc. (ONPH), a company that Dills secretly controlled, while avoiding legal requirements for a control person’s sale of stock to the public. According to the complaint, Dills acquired and sold Oncology Pharma stock through Bright Star International and Life Sciences Journeys. Dills allegedly transferred stock to individuals associated with Padilla and then allegedly received proceeds of illegal stock sales from Padilla.
During this period, Dills allegedly used his influence over Oncology Pharma to have it issue press releases designed to make its stock more appealing to investors. The complaint alleged that Dills purposely flouted the registration requirements of federal securities law by dividing his Oncology Pharma ownership between two front companies, transferring shares to Padilla, and then sharing in the proceeds of Padilla’s illegal sales.
Dills consented to a final judgment that permanently enjoins him from violating Sections 5 and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The judgment imposes a penny stock bar and additional injunctive relief and orders Dills to pay a $223,229 penalty. The judgment further orders Dills to pay disgorgement of $6,225,448 and prejudgment interest of $786,645 on a joint-and-several basis with Bright Star International and Life Sciences Journeys. The court also entered final judgments by consent against relief defendants Bright Star International and Life Sciences Journeys, ordering them to pay $6,920,345 and $91,747, respectively, in disgorgement and prejudgment interest on a joint and several basis with Dills.
The judgments provide that disgorgement may be offset by a dollar amount that Dills has separately agreed to pay to the U.S. Attorney’s Office for the District of Massachusetts in a plea agreement he entered on January 19, 2024, to resolve a related criminal action. In the criminal case, Dills agreed to enter a guilty plea to two counts of Securities Fraud and to forfeit $6,124,860. He is scheduled to be sentenced on May 1, 2024.
The SEC’s civil action remains pending against Joseph Padilla and relief defendants Carlos Hernandez, Jamie Quick, Ashley Robinson, and Arlene Sandoval. Each of these defendants has waived service of the summons and complaint. As this case was initially filed in June of 2023, the court requires that these defendants respond to the complaint in 30 days, no later than April 22, 2024.
Padilla and Dills were criminally indicted for the Oncology Pharma scheme on March 21, 2023. Padilla was already in custody at the time after being arrested on August 25, 2022, for charges he was facing for his involvement in a $7 million pump-and-dump fraud scheme using shares of Charlestowne Premium Beverages Inc (FPWM).
That earlier criminal complaint alleged that Padilla (i) concealed control by one or more persons of a large portion of Charlestowne stock (including nearly 97% of the float), (ii) orchestrated the fraudulent manipulation of Charlestowne stock in order to inflate its price through his association with five traders and cooperating witness #2 (CW-2) and, (iii) orchestrated the dump of Charlestowne stock through Valor Capital, a broker-dealer in the Cayman Islands netting at least $7 million in illicit proceeds.
Read our previous article – Joseph Padilla Arrested and Charged in $7 Million Securities Fraud – to learn more about Padilla’s arrest and original charges, as well as his history in the securities industry.
Also, read related information in our July 2023 article, SEC Charges James P. Anglim in Connection with Fraudulent Scheme to Manipulate Stock Prices, which ties the Charlestowne scheme to a dirty broker and offshore money laundering groups who have also faced various civil and criminal charges.
The new charges against Padilla in the Oncology Pharma share-selling scheme were added to the existing charges for the Charlestowne pump-and-dump scheme.
On August 17, 2023, Padilla entered a guilty plea to counts 1, 2, 3, and 4: Conspiracy to Commit Securities Fraud, two counts of Securities Fraud, and Attempt to Cause the Production of an Identification Document Without Lawful Authority.
On November 7, 2023, Padilla was sentenced to 66 months in prison, followed by 1 year of supervised release. The court also ordered Padilla to forfeit $3,000,000 in the case, which was raised to 3,163,827.91 on March 15, 2024, to be distributed among 33 victims identified by the government.
According to the Federal Bureau of Prisons Inmate Search, as of today, Padilla has yet to be transferred to BOP custody.
To speak with a Securities Attorney, please contact Brenda Hamilton at 200 E Palmetto Park 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.
Hamilton & Associates | Securities Attorneys
Brenda Hamilton, Securities Attorney
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Boca Raton, Florida 33432
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