SEC Obtains Judgments Against Two Individuals in Microcap Fraud Scheme

September 16, 2020/US SEC

On September 14, 2020, the U.S. District Court in Boston entered a final judgment against New York residents Frederick Mintz and Alan Fraade, whom the SEC charged with involvement in a scheme that used nominee shareholders to fraudulently register microcap company securities for public sale.

As alleged in the SEC’s complaint against five individuals filed in June 2019, co-defendant Henry Sargent created BMP Holdings Inc. and issued BMP shares to friends, family, and co-workers for the purpose of creating free-trading shares to be sold later on public markets. Mintz and Fraade, who were licensed lawyers at that time, prepared false attorney opinion letters to help Sargent and others facilitate the merger of BMP into PixarBio Corporation, a private company that the SEC previously charged, along with three other individuals, in a separate action.

Mintz and Fraade consented to the entry of a final judgment that permanently enjoins them 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 Sections 5(a) and 5(c) of the Securities Act. The judgment further prohibits Mintz and Fraade from providing legal services pertaining to federal securities law exemptions from registration. Mintz and Fraade have consented to pay, jointly and severally, disgorgement plus prejudgment interest for a total of $28,785.96. No civil penalty was imposed against Mintz and Fraade based on their financial condition.

In related administrative proceedings, the SEC yesterday issued orders permanently suspending Mintz and Fraade from appearing and practicing before the SEC as attorneys.

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