The Securities and Exchange Commission (SEC) announced it has foiled an evolving pump and dump scheme.
The SEC said it caught Robert Joseph Ritch, 51, of spreading false information on social media and other places designed to artificially pump the stock higher so he could sell.
Ritch, 51, of Spring Hill, Tennessee, has been the President, Secretary and Treasurer of the microcap pharmaceutical company Manzo Pharmaceuticals (MNZO) since at least July 17, 2017.
“According to the SEC’s order, Robert Ritch of Spring Hill, Tennessee, began spreading false information on social media about his investment successes and the company’s prospects shortly after taking control of Manzo Pharmaceuticals (MNZO) in July 2017. The order finds that despite Ritch’s statements that MNZO was a holding company that purported to invest in and acquire other companies, in reality it had a limited operating history and incurred continuing losses.” The SEC stated.“Contrary to his representations, Ritch had not founded, built, or exited any successful multi-million-dollar business and did not complete more than $1 billion in transactions during his career. In fact, according to the SEC’s order, he had not completed even $1 million in transactions during his career. In addition, Ritch lied to investors by concealing his criminal history, which includes three felony convictions for crimes of dishonesty.”
“Ritch used social media to tout widespread falsehoods about his company and track record designed to deceive the market and put investor money into his own pocket. As here, we will continue to act quickly to stop manipulative conduct and minimize investor harm,” said Marc Berger, Director of the SEC’s New York Regional Office.
According to SEC’s order, Ritch operated a website, robertritch.com, where he touted his investment experience, role at MNZO, and even suggested it was a mini- Berkshire Hathaway.
“Ritch primarily communicated to current and prospective MNZO investors through his website robertritch.com (the ‘Website’). On the Website, Ritch touted his investment background, his role at MNZO and the prospects of MNZO, which he claimed would ‘operate as a mini-Berkshire Hathaway’ and ‘acquire in whole or in part operating companies’ in the ‘energy, technology, real estate and financial services’ sectors.” The SEC order stated.“In fact, since his acquisition of over one million MNZO shares in or around January 2017, Ritch has authored numerous blog posts on his Website falsely claiming that he built and exited several multi million dollar businesses, had been involved in over $1 billion in investment deals, and had degrees from college and/or graduate school. On another blog post, Ritch obscured the nature of his criminal record when directly asked about it.”
The order shows just how technology has changed crime and fraud.
The 1997 movie, Boiler Room, also showed a similar pump and dump scheme; only in the movie, a boiler room full of young high-pressured stock brokers made calls all day long generally over the phone providing the same type of misinformation which Ritch allegedly provided on the internet.
Though boiler rooms still exist with these types of schemes- including when the SEC busted a real-life boiler room pump and dump operation in June 2017 at a firm called Power Trade Press– it is quickly being replaced with the same scheme on the internet.
“The SEC’s order finds that Ritch violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(b). Without admitting or denying the SEC’s findings, Ritch consented to a cease-and-desist order, officer-and-director bar, penny stock bar, and $50,000 penalty. The SEC also has suspended trading in MNZO.” The SEC concluded.
