On January 16, 2024, the Securities and Exchange Commission announced today that it has charged Jonathan Farber from New York, Aarif Jamani from British Columbia, Canada, and Brian Keasberry from Nevada with orchestrating a microcap fraud scheme aimed at retail investors. Each defendant played a distinct role in the alleged fraudulent activities concerning a publicly-traded company, which resulted in approximately $5 million in illegal stock sale profits.

Case Summary

The Securities and Exchange Commission (“Commission”) brings the following allegations against defendants Jonathan Farber (“Farber”), Aarif Jamani (“Jamani”), and Brian Keasberry (“Keasberry”):

County Line Energy Inc. (“County Line”), a small California-based public company, experienced little to no trading in its stock. From at least September 2017 through October 2021 (“Relevant Period”), defendants Farber, Jamani, and Keasberry (“Defendants”) executed a fraudulent scheme to profit from manipulating and selling County Line stock to retail investors, generating $5 million in profits.

First, the Defendants took control of County Line by installing close associates or handpicked figureheads in senior management positions. Farber and Jamani directed these managers to take actions beneficial to the Defendants. They used their influence to control the availability of County Line’s stock in public markets, enabling them to accumulate and dominate the stock.

Next, Farber and Jamani created a false impression of investor interest in County Line stock to lure retail investors. Initially, trading activity in County Line stock was virtually nonexistent. The Defendants simulated active trading by selling stock to friendly buyers controlled by Farber, who used accounts of three individuals to purchase the stock. Meanwhile, Jamani sold stock through an offshore brokerage firm using a nominee account, effectively making it appear as though they were selling to themselves.

The Defendants also funded an online promotional campaign, highlighting the stock’s potential and referencing press releases orchestrated by Farber and Jamani. However, they concealed their payment for the promotional campaign, their control over County Line, and their active sale of the majority of County Line’s freely tradable stock.

Ultimately, the Defendants profited from their scheme by selling the stock they controlled, capitalizing on the demand generated through their promotional efforts and manipulative trading. To circumvent restrictions on company insiders and offload large quantities of stock, Farber and Jamani concealed their affiliate status by lying to County Line’s transfer agent and selling shares through offshore nominee accounts.

During the sales of County Line stock orchestrated by Farber, Jamani, and Keasberry, no registration statements were on file or effective with the Commission as required by securities laws. No exemption from this registration requirement applied.

As a result of these actions, Farber, Jamani, and Keasberry violated, and unless restrained and enjoined will continue to violate, Sections 5(a) and 5(c), and 17(a)(1) and (3) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§77e(a), (c), 77q(a)(1), (3)], and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. §78j(b)] and Rules 10b-5(a) and (c) thereunder [17 C.F.R. §240.10b-5(a), (c)]. Additionally, Farber and Jamani violated, and unless restrained and enjoined will continue to violate, Section 9(a)(2) of the Exchange Act [15 U.S.C. §78i(a)(2)].

The Commission seeks a permanent injunction against the Defendants, prohibiting them from engaging in transactions, acts, practices, and courses of business similar to those alleged in this Complaint. The Commission also seeks disgorgement of all ill-gotten gains from the unlawful conduct, along with prejudgment interest, and civil penalties pursuant to Section 20(d) of the Securities Act [15 U.S.C. §77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. §78u(d)(3)]. Additionally, the Commission requests an order barring the Defendants from participating in any offering of a penny stock, pursuant to Section 20(g) of the Securities Act [15 U.S.C. §77t(g)] and Section 21(d) of the Exchange Act [15 U.S.C. §78u(d)]. Furthermore, the Commission seeks an order prohibiting the Defendants from serving as officers or directors of any issuer with a class of securities registered under Section 12 of the Exchange Act [15 U.S.C. §781], or required to file reports under Section 15(d) of the Exchange Act [15 U.S.C. §78o(d)], and any other relief the Court may deem appropriate.

Defendants

1. JONATHAN FARBER

Jonathan Farber, 57, resides in New York, New York. Farber directed County Line to take actions beneficial to the Defendants, purchased stock in the accounts of other individuals to simulate active trading, coordinated directly with stock sale promoters to market County Line stock—partially funded by entities he controlled—and sold County Line stock through these entities, sharing the profits with Jamani and Keasberry.

2. AARIF JAMANI

Aarif Jamani, 56, lives in Burnaby, British Columbia, Canada. Jamani orchestrated actions by County Line to benefit the Defendants, transferred County Line stock that was ultimately sold through offshore brokerage firms, and distributed the sales profits among himself, Farber, and Keasberry. Since September 2019, Jamani has been identified as a “control person” in County Line’s public filings.

3. BRIAN KEASBERRY

Brian Keasberry, 60, resides in Las Vegas, Nevada. Keasberry funded portions of the promotional campaigns for County Line stock using proceeds from stock sales and contributed to creating the illusion of legitimate arm's-length stock sales, even though the stock was only being transferred to an associate of the Defendants. Since September 2019, Keasberry has been identified as a “control person” in County Line’s public filings.

Related Entities

1. COUNTY LINE

County Line was incorporated in Nevada in February 1998. During the Relevant Period, County Line Energy Inc. described its business as “manufacturing and selling self-contained hydroponic systems for growing plants, vegetables, and cannabis.” Trading under the stock ticker symbol CYLC, County Line is listed on OTC Link, operated by OTC Markets Group, Inc. The company is located in Santa Ana, California.

2. WEXFORD INDUSTRIES LTD.

Wexford Industries Ltd. (“Wexford”) is a Wyoming company controlled by Farber. Wexford held and sold County Line stock on behalf of the Defendants, dividing the profits among Farber, Jamani, and Keasberry. Keasberry and Jamani were signatories on a Wexford bank account. By March 2016, Keasberry was identified as Wexford’s Treasurer or Fiscal Agent in a filing with the Wyoming Secretary of State, while Farber's relative was listed as the President/Director. Despite these filings, the relative was retired, and Farber managed Wexford, including seeking investment opportunities. Farber and the relative lived together during various intervals throughout the Relevant Period, especially during the early months of the COVID-19 pandemic.

3. 0985358 B.C. LTD.

0985358 B.C. Ltd. (“0985358”) is a Canadian company controlled by Jamani, who serves as its president, secretary, and treasurer. 0985358 received and sold County Line stock on behalf of the Defendants, with profits shared among Farber, Jamani, and Keasberry.

4. BLACK RIDGE HOLDINGS INC.

Black Ridge Holdings Inc. is a Nevada company controlled by Keasberry, who is its president, secretary, and treasurer. Black Ridge received profits from the sale of the Defendants’ County Line stock and made payments to various promoters.

5. BLUE DIAMOND EQUITIES INC.

Blue Diamond Equities Inc. is a Nevada company controlled by Keasberry. He is the sole Director of Blue Diamond, and both he and Jamani are signatories on a Blue Diamond bank account. Blue Diamond received profits from the sale of the Defendants’ County Line stock and was identified as the paying party on several County Line promotions.

Relevant Definitions

Before selling stock, individuals who control the stock of public companies (“control persons”) must comply with one of the following requirements: (a) register the stock sales with the Commission pursuant to Section 5 of the Securities Act [15 U.S.C. §77e]; (b) sell the stock under an applicable exemption from registration; or (c) sell the stock under conditions set forth in SEC Rule 144 [17 C.F.R. §240.144], which includes limitations on the amount of stock a control person can legally sell. These registration requirements, sale restrictions, and disclosure obligations are designed to inform investors about the nature of the stock they hold or consider buying, and about the individuals from whom they would be buying that stock.

1. AFFILIATE

An “affiliate” of a publicly traded company (also known as an “issuer”) is a person or entity that directly or indirectly controls, is controlled by, or is under common control with the issuer (i.e., a control person). “Control” refers to the power to direct the management and policies of the company. Affiliates include officers, directors, and controlling shareholders, as well as anyone under common control with the issuer. Without stock registration, affiliates can only sell a small percentage of the outstanding shares according to SEC Rule 144 [17 C.F.R. §230.144]. A group of individuals or entities acting together may collectively be considered an “affiliate” of an issuer.

2. RESTRICTED STOCK

“Restricted stock” is stock acquired from an issuer or an affiliate in a private transaction not registered with the Commission. Without an exemption under federal securities laws and rules, restricted stock cannot be offered or sold to the public unless a securities registration statement has been filed with the Commission (for an offer) or is in effect (for a sale). These registration statements, submitted and filed on Form S-1, contain important information about the issuer’s business operations, financial condition, results of operations, risk factors, and management.

3. UNRESTRICTED STOCK

“Unrestricted stock” refers to stock that can be legally offered and sold in the public market by a non-affiliate, typically after previously being subject to a registration statement filed with the Commission. Registration does not attach to the security itself, and registration at one stage for one party does not necessarily cover subsequent offers and sales by the same or different parties. When a control person buys publicly-traded or otherwise unrestricted shares in the company they control, those shares automatically become subject to legal restrictions on sales by an affiliate, strictly limiting the quantity of shares that may be sold in the public markets without registration. Without registration, affiliates are prohibited from selling large quantities of an issuer’s shares, regardless of how they obtained them.

4. OVER-THE-COUNTER MARKET

The Over-the-Counter (“OTC”) Markets is a stock quotation service that facilitates public trading of shares in companies not listed on national securities exchanges like NASDAQ or the New York Stock Exchange. Public companies that are not required to file reports with the Commission may choose to file public reports (such as quarterly and annual statements and other periodic disclosures) on the OTC Markets website for investors to review when making investment decisions.

5. BENEFICIAL OWNER

A “beneficial owner” of a security is anyone who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, has or shares investment power, including the power to dispose of or direct the disposition of the security.

6. PENNY STOCK

A “penny stock” is defined in Section 3(a)(51) of the Exchange Act and Rule 3a51-1 thereunder as an equity security that does not meet certain exemptions. Essentially, it includes most stocks not traded on a national securities exchange, those trading under $5 per share, and issuers that do not meet certain thresholds of tangible assets or revenue. During the Relevant Period, County Line stock was classified as a penny stock.

The Fraudulent Scheme

The Defendants collaborated to take control of County Line’s management, secure control over the company’s unrestricted shares, and sell them for substantial profits, all while hiding their true involvement in company management and stock ownership to circumvent stock sale limitations applicable to affiliates.

To sell these County Line shares, the Defendants needed investors willing to buy them. To attract these investors, they fabricated the appearance of an active market by simultaneously buying and selling County Line stock. Additionally, the Defendants financed a promotional campaign to draw in more investors who would purchase the stock they were holding, enabling them to sell at a profit.

Jamani meticulously recorded the Defendants’ County Line stock sales and proceeds in a notebook. This notebook also detailed the distribution of funds, including payments to entities controlled by Farber and Keasberry.

As a direct result of their scheme, the Defendants sold over 15 million shares of County Line stock, generating profits exceeding $5 million through entities that concealed their control of the stock and their true roles in the scheme.

A. FARBER, JAMANI, AND KEASBERRY AS AFFILIATES OF COUNTY LINE

Throughout the Relevant Period, Farber, Jamani, and Keasberry were affiliates of County Line, controlling its management and holding a significant portion of its unrestricted stock. County Line’s CEOs during this time were either longtime associates of Jamani or Farber, handpicked by them, or both. These CEOs took corporate actions based on directions from Jamani or Farber.

By the fall of 2018, a longtime associate of Jamani was nominally County Line’s Chief Executive Officer and Director (“CEO1”). Jamani initially approached CEO1 to handle County Line’s accounting, having previously done accounting work for other penny stock companies affiliated with Jamani. One of these companies, Company1, had Keasberry as its president and director.

However, CEO1’s involvement with County Line was minimal. CEO1 had never been the CEO of any other public company and, in 2023, did not recall serving as County Line’s CEO or receiving a salary for it. On January 4, 2018, County Line executed a reverse stock split, exchanging every 1,000 shares for a single share. This reduction made it easier for the Defendants to control the majority of the stock available for public trading (“the float”). CEO1 processed the reverse split after discussions with Jamani.

On March 15, 2018, Farber caused Wexford to transfer $10,020 to an individual who would soon become County Line’s next CEO (“CEO2”). Six days later, County Line issued CEO2 100 million shares for $10,000, resulting in CEO2 holding nearly 98% of County Line’s common stock. CEO2 was then appointed officer and director of County Line. At that time, CEO2 was also listed as the President, Secretary, and Treasurer of Company1, with Keasberry serving as its Director. Recent filings show Jamani as the President, Secretary, Treasurer, and Director of Company1.

In early 2018, an associate of Farber approached a new individual (“CEO3”) to consider becoming CEO of County Line. By March 2018, Jamani and Farber were in discussions with CEO3 about the role. During a phone call, CEO3 was informed that Farber would fund CEO3’s business if he became CEO and merged his grow box company into County Line. CEO3 learned that Farber worked with Jamani, who was also committed to funding CEO3’s business.

On July 5, 2018, CEO3 became President, Chief Executive Officer, Secretary, and Treasurer of County Line and joined the board. That same day, CEO3 acquired 70 million of CEO2’s 100 million shares at a nominal price. Less than two months later, under Farber’s instruction, CEO3 canceled 30 million of these shares. A month after joining County Line, CEO3 was given 2 million shares in lieu of salary.

During his tenure, CEO3 communicated frequently with an associate of Farber and Jamani (“Associate1”), who passed on instructions from Farber, Jamani, and another person. Associate1 instructed CEO3 to issue press releases about minor events to keep the stock price up, despite CEO3’s opinion that the topics did not merit releases.

In October 2018, CEO3 requested the transfer agent issue 2,225,000 shares to three shareholders. Associate1 intervened, instructing that these shares come from CEO3’s shares, not County Line’s issuance. CEO3 resigned around December 2018. After resigning, Jamani called CEO3, insisting that the 40 million shares initially received from CEO2 were not his and needed to be returned.

In June 2019, an individual who joined County Line with CEO3 became its CEO (“CEO4”). Jamani continued to manage the timing of County Line’s press releases. CEO4 believed Jamani became County Line’s Secretary in late 2019 or early 2020, although public filings did not disclose this until late 2022.

CEO4 frequently communicated with Jamani about the company’s financials and filings, expressing urgency and seeking answers on multiple occasions. In November 2021, CEO4 discussed meeting with Farber and Jamani during Farber’s visit to Malibu. In 2021, the British Columbia Securities Commission prohibited County Line stock from trading in Canada due to missing records. Jamani, facing bankruptcy without the ability to sell County Line stock, requested CEO4 obtain the company’s share transfer journal.

In County Line’s OTC Markets filings for the period ending September 30, 2019, Jamani, Keasberry, and Farber’s Wexford were all identified as control persons of County Line. This identification continued in County Line’s quarterly and annual filings through the remainder of the Relevant Period.

B. THE DEFENDANTS CONSOLIDATED CONTROL OVER THE COUNTY LINE FLOAT AND MADE FALSE STATEMENTS TO SELL THEIR SHARES TO THE PUBLIC

In early 2018, the Defendants began to amass and fraudulently sell County Line shares. For instance, less than a week after County Line issued CEO2 100 million newly created restricted shares of common stock, the company issued 1.35 million shares to Jamani’s entity, 0985358, as part of a purported debt conversion.

The issuance of restricted, non-trading shares to CEO2, later transferred to CEO3, allowed the Defendants to issue themselves millions of shares without surpassing the critical 10% threshold of total outstanding shares. Transfer agents scrutinize stock held by shareholders exceeding this 10% threshold to determine if it should be treated as unrestricted.

Since the shares issued to Jamani’s entity were unregistered, they bore a restrictive legend indicating their restricted status. To sell these shares without registration and within the desired quantity and timeframe, they needed to qualify for an exemption. Jamani could then request the transfer agent to remove the restrictive legend, facilitated by an attorney opinion letter indicating the shares were exempt from registration requirements.

On April 5, 2018, Jamani sought an attorney opinion letter to remove the restrictive legend from his 1.35 million County Line shares. The attorney noted that the OTCMarkets website showed only 2,109,175 shares outstanding as of March 13, 2018, advising Jamani to stay under 10% to avoid being an affiliate. Jamani responded, “I just spoke to issuer… They assure me the number is over 100mm.”

On April 6, 2018, the attorney provided Jamani with an opinion letter noting that the 1.35 million shares were less than “10% of the Issuer’s 103,459,138 outstanding shares of common stock as of March 31, 2018.” Without the earlier issuance of 100 million shares to CEO2, the 1.35 million shares would have been nearly 40% of the total outstanding shares, classifying Jamani as an affiliate and preventing the sale of those shares all at once.

The issuance of the 1.35 million shares gave the Defendants control of over 96% of the float. By controlling the float, they could prevent third parties from exploiting the demand they created, thereby maintaining share prices and protecting their profits.

Jamani falsely informed the transfer agent that 0985358, which he controlled, was not an affiliate of County Line. He repeatedly made false representations in attorney opinion and shareholder representation letters, claiming 0985358 was not an affiliate.

On various dates, Jamani provided attorney opinion letters to the transfer agent to remove the restrictive legend from County Line shares. Each letter stated: “We are informed and assume for purposes of this opinion that [0985358] is not a current or former officer, director, 10% shareholder, or other affiliate or insider of the Issuer.”

Jamani also frequently signed shareholder representation letters for 0985358, stating, “I request that the restrictive legend be removed from my stock certificates… of County Line… because I am not an affiliate… and have met all requirements of Rule 144.” The chart above lists the shares and the dates of the associated shareholder representation letters provided by Jamani.

The statements in the opinion and shareholder representation letters were false because Jamani, controlling 0985358, was an affiliate of County Line due to the Defendants’ control of the float and his influence over County Line’s management and operations.

Farber similarly made false representations to County Line’s transfer agent regarding Wexford’s, and his, status as a County Line affiliate. On various dates, Farber provided opinion letters to the transfer agent to remove the restrictive legend from County Line shares, each stating: “We are informed and assume for purposes of this opinion that [Wexford] is not a current or former officer, director, 10% shareholder, or other affiliate or insider of the Issuer.”

Farber also provided County Line with shareholder representation letters signed by a relative on behalf of Wexford, requesting the removal of the restrictive legend from Wexford-held shares. The chart above shows the shares and the dates of the associated shareholder representation letters provided by Farber.

The shareholder representation letters, signed by Farber’s relative, contained three versions. The first, identical to Jamani’s, was used for Wexford shares on January 3, 2020. The April and May letters stated, “The Undersigned is not at present and has not been during the preceding three months, an officer, director, or 10% shareholder of [County Line] or in any other way an ‘affiliate’ of [County Line] within the meaning of Rule 144(a)(1).” The July and November letters read, “I request that the restrictive legend be removed from my stock certificates… of County Line… because I am not an affiliate… and have met all requirements of Rule 144.”

The statements in these letters were false because Farber, controlling Wexford, was an affiliate of County Line due to his control of the float and his influence over County Line’s management and operations. Despite the shareholder representation letters being signed by a relative, Farber caused these false statements to be transmitted to the transfer agent to remove the restrictive legend from Wexford-held stock.

Farber and Jamani knew or were reckless in not knowing that they were County Line affiliates.

C. THE DEFENDANTS USED OTHERS TO BUY AND SELL STOCK AND CREATED THE FALSE APPEARANCE OF ACTIVE TRADING IN COUNTY LINE STOCK

To realize profits from their fraudulent scheme, the Defendants needed to sell their accumulated County Line stock. Their scheme involved two main steps: First, Farber placed purchase orders in accounts he controlled, creating a market volume for County Line shares that did not previously exist, making it appear as if the shares were actively traded by interested market participants. Before Farber’s actions, trading in County Line stock was sparse to nonexistent. Second, the Defendants used this artificially created volume and the timing of press releases they orchestrated to support a promotional campaign they funded. This campaign targeted retail investors, persuading them to buy the County Line stock the Defendants were selling.

In the first step, Farber bought County Line stock using the accounts of three associates, creating the illusion that independent investors were interested in the stock. These associates were:

Account Holder1: A 62-year-old New York resident, former girlfriend, longtime friend, and roommate of Farber, who allowed him access to her online brokerage account to buy and sell County Line stock.

Account Holder2: A 30-year-old New York resident and Farber’s current girlfriend, who similarly provided Farber access to her online brokerage account for trading County Line stock.

Account Holder3: A 64-year-old Washington State resident and longtime associate of Farber, who gave Farber access to his online brokerage account for the same purpose.

Farber used these accounts (collectively, the “Farber Controlled Accounts”) not only to trade County Line stock but also the stock of five other penny stock companies.

In early June 2018, Jamani transferred 1.35 million shares of County Line from 0985358 to an offshore entity that held these shares for the Defendants. This entity then transferred the shares to an offshore brokerage firm (“Firm”) capable of selling them on the public market. A week later, the Firm began selling these shares, and the proceeds were sent back to 0985358.

On June 15, 2018, after a 16-day period with no trading activity, Farber used the Farber Controlled Accounts to buy County Line stock, constituting 84% of all purchases that day. Meanwhile, Jamani, on behalf of the Defendants, sold 7,436 County Line shares through the Firm, representing 94% of the sell-side activity. Effectively, Jamani and Farber were controlling both the buy and sell sides of the market, essentially selling to themselves.

The chart below illustrates the lack of market activity from January 4, 2018, following the reverse stock split, to June 15, 2018, when a total of 4,592 County Line shares were traded over 19 days. It also shows the coordinated buy and sell activity by Jamani and Farber starting on June 15, 2018. At this point, the Defendants controlled approximately 96% of the shares available for public sale.

County Line Market Trading Activity From the Stock Split on January 4, 2018, Through June 29, 2018

In addition to selling through the Firm, the Defendants transferred their County Line shares to an offshore intermediary, which then transferred them to another offshore brokerage firm to be sold to the public on their behalf. Farber's use of the Farber Controlled Accounts created the appearance of genuine market activity.

Moreover, the Defendants used Account Holder3 to nominally purchase County Line shares in a private transaction. On April 17, 2018, Keasberry’s Black Ridge wired Account Holder3 $5,000. On June 6, 2018, Keasberry sent Account Holder3 instructions to return the $5,000 to Black Ridge for purchasing a County Line note, which Account Holder3 would convert into shares. Keasberry also sent the necessary paperwork to convert the note into County Line shares.

The next day, Keasberry emailed Account Holder3 the documents required to issue the shares without a resale restriction. He instructed Account Holder3 to send these documents to the attorney used by Jamani for legal opinions to obtain a legal opinion for the shares, including proof of payment to Black Ridge. Less than two weeks later, the attorney emailed Account Holder3 the opinion letter, which Account Holder3 forwarded to Jamani and Farber.

On June 27, 2018, Jamani emailed Account Holder3 the purchase and sale agreement for the County Line note, requesting a signed copy to transfer the stock. Account Holder3 promptly replied with the signed agreement.

Farber and Jamani were aware, or should have been aware, that the stock sold through the Firm and purchased using the Farber Controlled Accounts created the appearance of active trading. The Defendants used this trading activity to induce retail investors to buy County Line stock.

D. THE DEFENDANTS’ DIGITAL PROMOTION OF COUNTY LINE STOCK

While the Defendants were creating the illusion of active trading by controlling both the buy and sell sides of County Line stock, County Line issued two press releases in June 2018, its first in five years. These press releases allowed stock promoters, paid by the Defendants, to generate interest in County Line stock by treating these releases as significant news events, even if they were merely about personnel changes.

The digital promotional campaigns occurred in waves. First, between July 2018 and January 2019, the Defendants funded at least 49 emails to thousands of potential investors through listservs run by paid stock promoters. During this period, the Defendants sold nearly 5 million shares of County Line stock, making over $3 million in profits. Next, from September 2019 to November 2019, they funded at least 32 more promotional emails, selling over 2.6 million shares for profits exceeding $700,000. Finally, from February 2020 to May 2020, they sponsored at least 62 additional promotional emails, selling nearly 4 million shares for a profit of over $400,000.

County Line Stock Price and Trading Volume During Second Promotional Campaign

Many payments for these promotional campaigns went to an entity, Promoter1, which marketed directly to investors and engaged other promoters on behalf of the Defendants. Promoter1 was run by Associate2, a friend of Farber’s. Farber was Associate2’s main contact for the County Line promotional campaign and other campaigns. Promoter1 managed campaigns for at least four penny stocks at Farber’s request, receiving payments from Blue Diamond, Wexford, 0985358, and Black Ridge for these efforts. Associate2 believed these companies were either owned by Farber directly or through partnerships.

For the County Line campaign, the emails paid for by the Defendants aimed to persuade recipients to buy County Line stock. For example, on September 24, 2019, “Penny Stock Locks” sent an email with the subject: “CYLC Upgraded to Strong Buy. Low-Float + History of Monster Breakouts.” The email highlighted the stock’s low float and bullish indicators, promoting it as a potential breakout opportunity. It disclosed, “We have been compensated ten thousand dollars by [Promoter1] to conduct investor relations advertising and marketing for CYLC.”

Farber hired Promoter1 to promote County Line and at least two other penny stocks, using the Farber Controlled Accounts for trading. From August 2017 to June 2019, Promoter1 distributed promotional emails about these other penny stocks at Farber’s behest.

In addition to promoting County Line directly to investors, Promoter1 engaged other promoters, including Promoter2. This resulted in disclaimers from these other promoters identifying Promoter1 as the paying party, even though the Defendants initially provided the funds. Other entities, like Promoter2, were also paid by the Defendants and served as intermediaries, so the disclosure identified these entities instead of the Defendants as paying for the promotion.

Some County Line promotions incorrectly identified Keasberry’s Blue Diamond as the paying party. Blue Diamond did not pay for the promotions, but Keasberry’s other entity, Black Ridge, paid Promoter1 $160,000 while Promoter1 was promoting County Line. Wexford and 0985358 also paid Promoter1 during this time. Potential investors would not have been able to connect Blue Diamond to County Line, as it was never disclosed as a “control person” in public filings, unlike Black Ridge, Wexford, and 0985358.

Blue Diamond had previously paid promoters to promote other stocks before the County Line campaign began. Between January and April 2018, Keasberry, through Blue Diamond, paid Promoter1 $259,000.

The County Line promotions generally disclosed that the paying party, County Line, or their affiliates “likely wish to liquidate shares of [County Line] at or near the time you receive this communication, which has the potential to hurt share prices.” However, they failed to indicate that the paying party controlled County Line and was selling large quantities of its freely tradable stock.

The Defendants knew, or were reckless in not knowing, that the stock promoters they hired did not disclose that the Defendants were paying for the promotion, were affiliates of County Line, and controlled the float they were actively selling into the promotion. Accordingly, the Defendants knew or were reckless in not knowing that the information disseminated through their hired promoters was misleading and omitted key details.

One promotional email, sent by “Beat Penny Stocks” on September 25, 2019, with the subject line: “[Subscriber Name], CYLC stock proves trading is NOT hard,” quoted County Line press releases. It stated in bold red text, “CYLC is perhaps THE HOTTEST INVESTMENT OPPORTUNITY heading into Wednesday with an upside of 489% and you could be making a very costly mistake by ignoring it.” The email disclosed that the promoter had received compensation from Promoter1 and that Promoter1, County Line, or their affiliates likely wished to liquidate shares at or near the time of the communication, potentially hurting share prices. This disclaimer was inaccurate as the Defendants had been selling shares to the very investors targeted by the promotion and continued to do so. Additionally, the disclaimer was hidden from view, written in white text on a white background, making it unreadable without manipulation by the recipient.

From September 4 to 24, 2019, the Defendants sold 269,080 shares of County Line stock. In the three days following the above email, they sold another 366,639 shares, capitalizing on the interest generated by the promotions they paid for.

In addition to email promotions, Farber paid an individual (“Promoter3”) to promote County Line stock on social media. Promoter3 ran chat rooms and instructed other social media users on how to generate investor interest in County Line, often using Twitter without disclosures.

Between June 26, 2018, and May 19, 2020, the Defendants' entities paid promoters $1,324,641. Between July 7, 2018, and May 12, 2020, the promotional campaigns generated enough demand for the Defendants to sell nearly 13 million shares of County Line for total profits exceeding $4.7 million.

From June 15, 2018, through March 30, 2021, funds were distributed from the Defendants' entities to various individuals and entities.

E. THE DEFENDANTS’ UNREGISTERED OFFERS AND SALES

Farber, Jamani, and Keasberry are considered affiliates of County Line due to their involvement in the company’s management, funding, operations, and their control over the stock float. The Defendants offered and sold County Line stock without a registration statement.

At the time these offers and sales were made, no registration statement was filed with the Commission or was in effect for these transactions, as mandated by Section 5 of the Securities Act. Additionally, no exemption from the registration requirement applied.

Claims For Relief

I. FRAUD IN CONNECTION WITH THE PURCHASE OR SALES OF SECURITIES: (VIOLATIONS OF SECTION 10(B) OF THE EXCHANGE ACT AND RULES 10B-5(A) AND (C) BY ALL DEFENDANTS)

The allegations in paragraphs 1 through 104 are re-alleged and incorporated by reference as if fully set forth herein.

During the Relevant Period, County Line stock was considered a security under Section 3(a)(10) of the Exchange Act [15 U.S.C. §78c(a)(10)].

Through the conduct described above, defendants Farber, Jamani, and Keasberry, directly or indirectly, in connection with the purchase or sale of securities, used means or instrumentalities of interstate commerce, the mails, or any facility of a national securities exchange to intentionally, knowingly, or recklessly (i) employ devices, schemes, or artifices to defraud, and (ii) engage in acts, practices, or courses of business that operated or would operate as a fraud or deceit upon any persons, including purchasers or sellers of the securities.

As a result of the conduct described above, defendants Farber, Jamani, and Keasberry violated Section 10(b) of the Exchange Act [15 U.S.C. §78j(b)] and Rules 10b-5(a) and (c) [17 C.F.R. §240.10b-5(a) and (c)] thereunder, and will continue to do so unless enjoined.

II. FRAUD IN THE OFFER OR SALE OF SECURITIES: (VIOLATIONS OF SECTIONS 17(A)(1) AND (3) OF THE SECURITIES ACT BY ALL DEFENDANTS)

The allegations in paragraphs 1 through 104 are re-alleged and incorporated by reference as if fully set forth herein.

During the Relevant Period, County Line stock was classified as a security under Section 2(a)(1) of the Securities Act [15 U.S.C. §77b(a)(1)].

Through the conduct described above, defendants Farber, Jamani, and Keasberry, in connection with the offer or sale of securities, used means or instrumentalities of interstate commerce or the mails to (i) intentionally, knowingly, or recklessly employ devices, schemes, or artifices to defraud; and (ii) intentionally, knowingly, recklessly, or negligently engage in transactions, practices, or courses of business that operated or would operate as a fraud or deceit upon any persons, including purchasers or sellers of the securities.

As a result of the conduct described above, defendants Farber, Jamani, and Keasberry violated Sections 17(a)(1) and (3) of the Securities Act [15 U.S.C. §77q(a)(1) and (3)] and will continue to do so unless enjoined.

III. MARKET MANIPULATION: (VIOLATIONS OF SECTION 9(A)(2) OF THE EXCHANGE ACT BY FARBER AND JAMANI)

The allegations in paragraphs 1 through 104 are re-alleged and incorporated by reference as if fully set forth herein.

Through the conduct described above, defendants Farber and Jamani, directly or indirectly, using the mails or any means or instrumentality of interstate commerce, or any facility of a national securities exchange, executed or coordinated a series of transactions in a security that was not a government security. These transactions created actual or apparent active trading in the security or manipulated its price to induce the purchase or sale of the security by others. This conduct included Farber’s and Jamani’s actions of engaging in and arranging securities transactions to affect the volume and prices of the security to induce its purchase or sale by others.

Farber and Jamani acted with the intent to induce trading by others.

Through the conduct described above, defendants Farber and Jamani violated Section 9(a)(2) of the Exchange Act [15 U.S.C. §78i(a)(2)] and will continue to do so unless enjoined.

IV. UNREGISTERED OFFERINGS OF SECURITIES: (VIOLATIONS OF SECTIONS 5(A) AND 5(C) OF THE SECURITIES ACT BY ALL DEFENDANTS)

The allegations in paragraphs 1 through 104 are re-alleged and incorporated by reference as if fully set forth herein.

During the Relevant Period, County Line stock was classified as a security under Section 2(a)(1) of the Securities Act [15 U.S.C. §77b(a)(1)].

Through the conduct described above, defendants Farber, Jamani, and Keasberry, directly or indirectly: (i) used the means or instruments of transportation or communication in interstate commerce or of the mails to sell, through a prospectus or otherwise, securities for which no registration statement was in effect and no exemption from registration was available; and/or (ii) used the means or instruments of transportation or communication in interstate commerce or of the mails to offer to sell, through a prospectus or otherwise, securities for which no registration statement was filed and no exemption from registration was available.

As a result, defendants Farber, Jamani, and Keasberry violated Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§77e(a) and (c)] and will continue to violate those sections unless enjoined.

Prayer For Relief

The Commission respectfully requests that this Court:

1. Permanently restrain defendants Farber, Jamani, and Keasberry, along with their officers, agents, servants, employees, attorneys, and any persons in active concert or participation with them who receive actual notice of the injunction by personal service or otherwise, from violating Sections 5 and 17(a) of the Securities Act [15 U.S.C. §§ 77e, 77q], Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5];

2. Permanently restrain defendants Farber and Jamani, along with their officers, agents, servants, employees, attorneys, and any persons in active concert or participation with them who receive actual notice of the injunction by personal service or otherwise, from violating Section 9(a) of the Exchange Act [15 U.S.C. § 78i(a)];

3. Order the Defendants to disgorge, with prejudgment interest, all ill-gotten gains obtained through the unlawful conduct alleged in this Complaint;

4. Order the Defendants to pay civil monetary penalties pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)];

5. Enter an order barring the Defendants from participating in any offering of a penny stock, pursuant to Section 20(g) of the Securities Act [15 U.S.C. § 77t(g)] and Section 21(d) of the Exchange Act [15 U.S.C. § 78u(d)];

6. Enter an order barring the Defendants from acting as officers or directors of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act [15 U.S.C. § 781], or that is required to file reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)];

7. Retain jurisdiction over this action to implement and carry out the terms of all orders and decrees that may be entered; and

8. Grant such other and further relief as this Court may deem just and proper.

Key Takeaways For Investors

1. DUE DILIGENCE IS CRUCIAL

Investors should perform thorough due diligence before investing in any stock, especially those traded on less regulated markets like the OTC Markets. Understanding the company’s management, financial health, and stock trading history is essential to avoid falling prey to fraudulent schemes.

2. BE WARY OF UNUSUAL TRADING ACTIVITY

Sudden spikes in trading volume and stock price without clear fundamental reasons can be a red flag. Investors should be cautious of stocks that exhibit these patterns, as they may be manipulated.

3. SCRUTINIZE PROMOTIONAL CAMPAIGNS

Aggressive promotional campaigns, especially those involving penny stocks, should be viewed with skepticism. Promotional emails and social media posts often exaggerate a stock's potential and may be part of a pump-and-dump scheme.

4. UNDERSTAND THE ROLE OF AFFILIATES

Recognize that individuals or entities controlling a significant portion of a company's stock (affiliates) have substantial influence over stock price movements. Their trades can significantly impact the market, and their activities should be closely monitored.

5. IMPORTANCE OF REGISTRATION AND DISCLOSURE

Legitimate stock offerings should comply with registration requirements set by the Securities and Exchange Commission (SEC). Lack of proper registration and disclosure is a significant red flag indicating potential fraud.

6. BEWARE OF CONFLICTS OF INTEREST

Management and major shareholders should act in the best interests of all shareholders. When insiders are actively selling shares while promoting the stock, it suggests a conflict of interest that can harm retail investors.

7. LEGAL PROTECTIONS AND RECOURSE

Investors should be aware of their legal protections under securities laws. Understanding the recourse available through regulatory bodies like the SEC can help in seeking justice and compensation in cases of fraud.

8. SIGNIFICANCE OF FINANCIAL TRANSPARENCY

Transparent and accurate financial reporting is critical. Investors should prioritize companies with clear, timely, and comprehensive financial disclosures.

9. ROLE OF REGULATORY COMPLIANCE

Companies and their management must comply with all relevant securities regulations. Investors should favor companies with a strong track record of regulatory compliance.

10. RISKS OF PENNY STOCKS

Investing in penny stocks carries higher risks due to their low liquidity, high volatility, and potential for manipulation. Investors should approach these investments with caution and be prepared for the inherent risks.

By understanding these key takeaways, investors can better protect themselves from fraudulent activities and make more informed investment decisions.

Key Takeaways For Financial Market Practitioners And Management

1. ADHERENCE TO REGULATORY COMPLIANCE

Ensure strict compliance with all securities regulations, including proper registration and disclosure requirements. Non-compliance can lead to severe legal consequences and damage to reputation.

2. TRANSPARENCY AND INTEGRITY

Maintain high standards of transparency and integrity in all financial dealings. Transparent communication with shareholders and regulatory bodies helps build trust and credibility.

3. VIGILANCE AGAINST MARKET MANIPULATION

Be vigilant against any signs of market manipulation within your organization. Implement robust internal controls and monitoring systems to detect and prevent fraudulent activities.

4. ETHICAL MANAGEMENT PRACTICES

Foster an ethical corporate culture where management prioritizes the interests of all shareholders. Avoid conflicts of interest and ensure that decisions are made with integrity and transparency.

5. ROBUST DUE DILIGENCE

Conduct thorough due diligence when engaging in stock issuances, acquisitions, or other significant transactions. This includes verifying the legitimacy and compliance of all parties involved.

6. EFFECTIVE COMMUNICATION STRATEGIES

Ensure that all promotional and communication strategies are truthful and not misleading. Avoid exaggerating the company’s potential in marketing materials to prevent misleading investors.

7. TRAINING AND AWARENESS

Provide regular training to employees and management on regulatory compliance, ethical standards, and best practices in financial reporting and market operations.

8. PROPER USE OF INSIDER INFORMATION

Establish clear policies regarding the use of insider information. Ensure that insiders do not exploit their access to non-public information for personal gain at the expense of shareholders.

9. ENGAGEMENT WITH REGULATORY BODIES

Maintain proactive engagement with regulatory bodies like the SEC. Ensure timely and accurate filing of required reports and disclosures to maintain regulatory compliance.

10. RISK MANAGEMENT

Implement comprehensive risk management practices to identify, assess, and mitigate potential risks related to market manipulation, regulatory breaches, and ethical lapses.

11. ACCOUNTABILITY AND GOVERNANCE

Strengthen corporate governance structures to ensure accountability at all levels of the organization. Regularly review and update governance policies to align with regulatory changes and best practices.

12. CONSEQUENCES OF MISCONDUCT

Understand the severe consequences of fraudulent activities, including legal penalties, financial losses, and reputational damage. Ensure that all actions taken by the management and the company are above board.

By incorporating these key takeaways, financial market practitioners and management can help safeguard their organizations from legal issues, build investor confidence, and promote a fair and transparent market environment.