BOSTON (WWLP) – A Boston man was sentenced in federal court for exerting secret control over a Massachusetts-based company as part of a pump-and-dump securities fraud scheme.
According to the Department of Justice, 57-year-old Christopher R. Esposito, formerly of Everett, was sentenced on November 14 to five years of probation, three months to be served at a halfway house, and ordered to pay forfeiture and restitution. He pleaded guilty to one count of securities fraud in April 2023.
Esposito and co-conspirator, Anthony Jay Pignatello, worked to conceal their control over Cannabiz Mobile, Inc. and to use backdated promissory notes to obtain free-trading shares in the company over the course of 2012 and 2015. They both took other steps taken to conceal their control, including how Esposito caused another individual to be installed as the company’s chairman, president, and CEO.
The executive reported to Esposito, and the two arranged for a promotional campaign in October 2014 to artificially inflate the value and trading volume of Cannabiz Mobile, Inc.’s stock so that they could sell their shares secretly. Between September 2014 and February 2015, Esposito personally sold around 1.3 million shares that were fraudulently obtained as part of the scheme.
Esposito was ordered to pay over $20,000 in connection with the pump-and-dump of Cannabiz Mobile. He was also ordered to pay over $61,000 in restitution to the investors who lost money in a separate business venture that Esposito pitched involving the company, Code2Action, Inc.
Between August 2019 and February 2020, he represented to investors that he would take Code2Action, Inc. public through a reverse merger and that he solicited investments in the company for that purpose, but the merger never took place.
Pignatello pleaded guilty in March 2021 to one count of conspiracy to commit securities fraud for his role in the Cannabiz Mobile scheme. He is scheduled to be sentenced on December 12 before U.S. District Court Judge George A. O’Toole Jr.
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