Joseph Padilla, et al.
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25952 / March 20, 2024
Securities and Exchange Commission v. Padilla, et al., No. 1:23-cv-11331 (D. Mass. filed June 13, 2023)
SEC Obtains Final Judgment Against Individual in Stock Selling Scheme
On March 19, 2024, the U.S. District Court for the District of Massachusetts entered final judgments against California resident Kevin C. Dills and two entities that Dills controlled.
The SEC charged Dills and Joseph Padilla in June 2023 for their roles in a fraudulent stock selling scheme. According to the complaint, Padilla engaged in a fraudulent scheme for his own benefit and also on behalf of individuals who paid Padilla to arrange illegal stock sales. The complaint alleges that those individuals hid their identities by selling stock through offshore accounts in different names that Padilla arranged. From early 2020 into 2022, Dills allegedly conspired with Padilla to sell stock of Oncology Pharma, Inc., a company that Dills secretly controlled, while avoiding legal requirements for a control person’s sale of stock to the public. According to the complaint, Dills acquired and sold Oncology Pharma stock through two other entities that he controlled, Bright Star International, Inc. and Life Sciences Journeys, Inc. Dills allegedly transferred stock to individuals associated with Padilla and then allegedly received proceeds of illegal stock sales from Padilla. During this period, Dills allegedly used his influence over Oncology Pharma to have it issue press releases designed to make its stock more appealing to investors. The complaint alleged that Dills, by dividing his Oncology Pharma ownership between two front companies, transferring shares to Padilla, and then sharing in the proceeds of Padilla’s illegal sales, purposely flouted the registration requirements of federal securities law.
Dills consented to a final judgment that permanently enjoins him from violating Sections 5 and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The judgment imposes a penny stock bar and additional injunctive relief and orders Dills to pay a $223,229 penalty. The judgment further orders Dills to pay disgorgement of $6,225,448 and prejudgment interest of $786,645 on a joint-and-several basis with Bright Star International and Life Sciences Journeys. The court also entered final judgments by consent against relief defendants Bright Star International and Life Sciences Journeys, ordering them to pay $6,920,345 and $91,747, respectively, in disgorgement and prejudgment interest on a joint and several basis with Dills. The judgments provide that disgorgement may be offset by a dollar amount that Dills has separately agreed to pay to the U.S. Attorney’s Office for the District of Massachusetts in a plea agreement to resolve a related criminal action. If the court in the criminal action does not accept Dill’s plea agreement, then Dills would owe full disgorgement to the Commission.
The SEC’s case is being handled by Ryan Murphy, Michael Moran, Kathleen Shields, and Amy Gwiazda of the Boston Regional Office.