On February 8, 2023, the U.S. District Court for the Eastern District of New York entered final judgments against Craig Josephberg and Ira Shapiro, enjoining them from violating certain provisions of the federal securities law and imposing other remedies.

According to the SEC's complaint, starting in 2013, Josephberg and Shapiro, along with the other defendants, were involved in a scheme to manipulate the securities of CodeSmart Holdings, Inc. ("CodeSmart"). The SEC alleged that Shapiro, as CEO of CodeSmart, engaged in a promotional campaign to artificially inflate the price of the stock. Meanwhile Josephberg and another individual invested their brokerage clients in CodeSmart. In short, the SEC alleged that the plan was for the defendants to profit at the expense of Josephberg's brokerage clients.

The SEC's complaint charged Josephberg with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Sections 9(a) and 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder and charged Shapiro with violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. On February 8, 2023, the Court entered separate final judgments against Josephberg and Shapiro by consent in which they each agreed to be permanently enjoined from violations of the charged provisions and to penny stock bars. Shapiro additionally consented to an officer and director bar. Josephberg agreed to disgorge over $735,000 in ill-gotten gains and prejudgment interest thereon, the payment of which was deemed satisfied by the restitution order in the parallel criminal proceeding, United States v. DiScala, et al., 14 Cr. 399 (E.D.N.Y.).

The SEC's litigation is being handled by Todd Brody and Lindsay Moilanen of the New York Regional Office and is being supervised by Sheldon L. Pollock and Joseph Sansone. The SEC appreciates the assistance of the U.S. Attorney's Office for the Eastern District of New York and the Federal Bureau of Investigation.