On February 16, 2023, the U.S. District Court for the District of Massachusetts entered final judgments by consent against Canadian resident Graham R. Taylor and Maryland resident William T. Kaitz. In August 2021, the SEC charged Taylor and Kaitz and seven other defendants for their roles in fraudulent schemes that collectively generated hundreds of millions of dollars from unlawful stock sales and caused significant harm to retail investors in the United States and around the world. Among other relief, the judgment orders Taylor to pay more than $4.9 million and Kaitz to pay more than $1.3 million.

According to the SEC's complaint, Canadian resident Frederick Sharp masterminded a complex scheme from 2011 to 2019 in which he and his associates enabled control persons of microcap companies, whose stock was publicly traded in the U.S. securities markets, to conceal their control and ownership of huge amounts of the stock and then surreptitiously dump the stock into the U.S. markets, in violation of federal securities laws.  The services Sharp and his associates allegedly provided included furnishing networks of offshore shell companies to conceal stock ownership, arranging stock transfers and money transmittals, and providing encrypted accounting and communications systems.

The complaint alleges that one group of control persons comprised of three defendants frequently collaborated with Sharp to sell massive stock positions while hiding their control positions and stock promotional activities from the investing public. Taylor allegedly coordinated with these defendants to sell shares fraudulently and he received a significant cut of the illegal stock sale proceeds. According to the complaint, Kaitz worked as a promoter and touted stocks that the control group simultaneously planned to sell, while concealing their roles.

Taylor, without admitting or denying the allegations in the SEC's complaint, has consented to a final judgment that permanently enjoins him from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, and the registration provisions of Section 5 of the Securities Act. Taylor's judgment orders him to pay disgorgement of $3,432,412, prejudgment interest of $1,285,272, and a civil penalty of $207,183. Kaitz, without admitting or denying the allegations in the SEC's complaint, has consented to a final judgment that permanently enjoins him from violating the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Kaitz's judgment orders him to pay disgorgement of $812,854, prejudgment interest of $279,014, and a civil penalty of $215,000. Both judgments further impose penny stock bars against Taylor and Kaitz. The court previously entered a judgment by default against Sharp that, among other relief, ordered him to pay more than $50 million.

The ongoing litigation against the remaining defendants is being handled by Kathleen Shields, David London, Alfred Day, and Ryan Murphy of the Boston Regional Office and Katherine Bromberg of the Enforcement Division's Retail Strategy Task Force.