SEC vs. Andrew DeFrancesco et al. Case No. 1:23-cv-00131-JSR

On January 6, 2023, the Commission filed a complaint against Andrew DeFrancesco (“DeFrancesco”), Marlio Mauricio Diaz Cardona (“Diaz”), Carlos Felipe Rezk (“Rezk”), Nikola Faukovic, and Catherine DeFrancesco (collectively, the “Defendants”). The complaint alleges that from March 2018 through June 2019, Defendants DeFrancesco, Diaz, and Rezk, officers and directors of Cool Holdings, Inc. (“Cool Holdings”), orchestrated a fraudulent scheme to deceive the investing public about the operations and prospects of their company through repeated, materially false and misleading misstatements and omissions in SEC filings and in a promotion campaign. The Defendants also engaged in a “pump and dump” of Cool Holdings’ stock which included secretly funding a series of fraudulent articles promoting Cool Holdings as a profitable and expanding company causing Cool Holdings’ share price and trading volume to increase significantly. During the promotional campaign, DeFrancesco and other Defendants secretly sold shares of Cool Holdings, through accounts controlled by nominee entities and by his ex-wife, Catherine DeFrancesco, generating proceeds of more than $11.5 million. See Complaint.

On June 15, 2023, the Court entered final judgments as to Faukovic and Catherine DeFrancesco. The Court found Faukovic liable for disgorgement of $11,779.43, prejudgment interest of $2,570.89, and a civil penalty of $111,614.00 for a total of $125,964.32 and found Catherine DeFrancesco liable for a civil penalty of $122,782.00. See Faukovic’s Final Judgment and Catherine DeFrancesco’s Final Judgment. On July 5, 2023, the Court entered final judgment as to Andrew DeFrancesco and ordered him liable for disgorgement of $1,034,051.52, prejudgment interest of $242,018.97, and a civil penalty of $1,737,224.52 for a total of $3,013,295.01. See DeFrancesco’s Final Judgment. On November 21, 2023, the Court entered final judgments as to Diaz and Rezk and ordered them each liable for a civil penalty of $223,229. See Diaz’s Final Judgment and Rezk’s Final Judgment.

On July 22, 2024, the Court entered an order creating a Fair Fund and ordered that any post-judgment interest, accrued interest, and any additional funds collected from the Defendants be included in the Fair Fund. The Court order also appointed Heffler, Radetich & Saitta, LLP as the Tax Administrator of the Fair Fund fulfil the tax obligations of the Fair Fund. See Order.

For more information, please contact the Commission:

Office of Distributions
Email: ENFOfficeofDistributions@sec.gov