Securities Regulation Daily Wrap Up, FRAUD AND MANIPULATION—E.D.N.Y.: Pump-and dump scheme generated over $21 million in net trading proceeds, (May 2, 2025)
Organizations Mentioned:American Green, Inc.
By R. Jason Howard, J.D.
The defendants generated interest in the company’s stock “through manipulative trading, promotional campaigns, and false statements.”
The SEC has filed fraud charges against three Arizona residents for their alleged involvement in a fraudulent scheme to sell millions of shares of American Green, Inc., an Arizona-based non-SEC reporting microcap public company (SEC v Golusin, No 1:25-cv-02379 (E.D.N.Y. Apr. 29, 2025)).
American Green. American Green offers “retailing, branding, and commercial cultivating strategies in conjunction with its ongoing business with various licensed medical marijuana and retail dispensaries.” American Green’s common stock is traded under the ticker symbol ERBB.
Scheme. According to the SEC press release, the three defendants ran the scheme from approximately January 2017 through at least mid-2022. As part of the scheme, the defendants, individually and through nominee entities under their control, “lent money to American Green in exchange for secured convertible debentures, pursuant to which they received millions of American Green shares at a steep discount to the market price.”
The complaint also alleges that two of the defendants misrepresented their control of American Green to American Green’s transfer agent and their broker-dealers by falsely asserting that they and their nominee entities were not affiliates of American Green so that the transfer agent would remove any trading restrictions and clear the way for the defendants to sell the stock to the public.
To defraud the investing public of the more than $21 million in net trading proceeds, the defendants used “manipulative trading, promotional campaigns, and false statements” which drove up the price of American Green stock. The deceptive promotional campaigns enabled the defendants to artificially generate demand for American Green stock, and they concealed the fact that the shares were being sold by people who controlled the company. As a result, retail investors were left with “catastrophic losses.”
Violations. The SEC alleges that the defendants violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and that two of the defendants also violated Sections 5(a) and 5(c) of the Securities Act.
Relief sought. The SEC is seeking permanent injunctive relief, conduct-based injunctions, disgorgement and prejudgment interest, civil penalties, penny stock bars, and officer-and-director bars for two of the defendants.
The case is No. 1:25-cv-02379.
Attorneys: Davis Oliver for the SEC.
Companies: American Green, Inc.
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