TRENTON, N.J. – According to a press release from the United States Attorney's Office, District of New Jersey, a Springfield resident who was the owner of a business consulting firm was sentenced to 25 months in prison for operating a scheme that artificially inflated the stock price of a publicly traded company he controlled.
U.S. Attorney Craig Carpenito announced the charges on James Farinella, 52, of Springfield, New Jersey. In addition to his prison term, Farinella was sentenced to three years of supervised release. The U.S. Securities and Exchange Commission (SEC) also has a civil complaint pending against Farinella.
According to the documents filed in the case and statements made in court, Farinella and others conspired from June through December of 2012 to operate a scheme to profit by fraudulently inflating the prices of Pazoo Inc. (PZOO).
At the time of the scheme, Pazoo had little or no real business operations according to the attorney's office, and when it started trading in June 2012, Farinella controlled 98 percent of the free-trading shares in Pazoo.
Farinella and other conspirators in the scheme allegedly inflated the price of Pazoo shares by orchestrating a series of trades between sock puppet accounts run by the group to create the appearance that Pazoo stock was a good stock purchase.
The release also alleges that in order to further inflate the prices, Farinella and his conspirators sent out misleading promotional materials to lure investors to purchase the stocks, including some that falsely touted Pazoo as a leading provider of nutritional supplements for people and their pets.
After inflating the price of the stock, Farinella and his conspirators then sold large volumes of the stock to over 1,000 investors at the artificially inflated prices. After their actions, the company’s stock price dropped, causing victims of the scheme to suffer losses.
The alleged stock manipulation scheme netted Farinella and others approximately $1.1 million in gross trading proceeds.
In the release, the district attorney's office credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, with the investigation leading to the sentencing. Carpenito also thanked the U.S. Securities and Exchange Commission’s New York Regional Office, under the direction of Marc P. Berger, for its assistance in the matter.