U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25978 / April 15, 2024
Securities and Exchange Commission v. George Stubos, et al.; Civil Action No. 1:22-cv-04674 (S.D.N.Y filed June 6, 2022)
Court Orders Relief Defendant in Fraudulent Microcap Scheme to Pay Over $2 Million
On April 15, 2024, the U.S. District Court for the Southern District of New York entered a final judgment against relief defendant Dori-Ann Stubos, ordering her to pay more than $2.3 million in disgorgement and prejudgment interest. In June 2022, the SEC charged George Stubos for engaging in a deceptive scheme involving several microcap companies. Dori-Ann Stubos, George Stubos' wife, allegedly received illicit proceeds from George Stubos' fraudulent scheme for no legitimate purpose or consideration.
The SEC's action alleged that Canadian resident George Stubos secretly gained control of several thinly traded microcap companies whose stock was publicly traded in the U.S. securities markets, hired stock promoters to create demand for his stock, and generated substantial illicit profits by selling the stock to unsuspecting investors. Stubos allegedly misled investors, brokers, and transfer agents (companies that maintain records of stock ownership) in order to convince these parties that his stock shares were eligible for trading in the public markets, when in fact he did not register his sales of those stock shares with the Commission and did not disclose accurate information about his control over the companies. The complaint alleged that Stubos also engaged in manipulative trading to create the appearance of active market trading and thus increased investor demand for the stock. According to the complaint, George Stubos transferred some of the profits from his illicit stock sales to Dori-Ann Stubos, including for the purchase of a house in California in the name of Dori-Ann Stubos.
The court previously entered a final judgment against George Stubos by consent. George Stubos' judgment ordered him, among other relief, to pay disgorgement of $5,367,926 and prejudgment interest of $806,108. The final judgment against Dori-Ann Stubos, entered by consent, holds Dori-Ann Stubos jointly and severally liable with George Stubos for disgorgement of $1,775,000 in benefits gained as a result of George Stubos' conduct, together with $533,108 in prejudgment interest. This concludes the litigation in this matter.
The SEC's case was handled by Kathleen Shields, Alfred Day, Jennifer Cardello, and Ryan Murphy of the Boston Regional Office.