A New York federal judge threw out the Securities and Exchange Commission’s additional claims of MGT’s CEO, Robert Ladd, using his father’s stock trading account to benefit himself unbeknownst to MGT Capital Investment shareholders. But it’s not all rosy for the Bitcoin CEO because Judge Ramos ruled on January 27th that the SEC’s claims of fraud against Ladd for allegedly knowing Barry Honig and his associates traded as an undisclosed group of affiliates to manipulate the stock price can go forward to trial. The government’s claim that Ladd knowingly issued a press release that was a false material event about his business partner John McAfee was also allowed to stay in the SEC’s enforcement case.
Ladd is the only remaining defendant in the multi-million pump and dump case that the SEC says was orchestrated by Barry C. Honig in over 40 stocks. Since the case was first brought in September 2018 all of the individuals charged that worked with Honig have made plea deals with the SEC. The SEC has tried, with three versions of the complaint, to nail Ladd on something that would force him into a settlement but Ladd’s not folding.
“Judge Ramos’ decision effectively dismissing the new allegations filed in the Amended Complaint is a great first step towards Mr. Ladd’s full vindication. The entire case against my client is ill-conceived and should be abandoned,” said Ladd’s attorney Adam Ford of New York-based Ford O’Brien LLP.
Attorney Ford is Ladd’s second lawyer in his three year battle with the SEC. Ford is known on Wall Street for beating the SEC and DOJ by getting serial stock promoter Guy Gentile off and most recently for a not guilty verdict in the criminal case for the CFO of Mark Nordlicht’s billion dollar investment fund called Platinum Partners.
Earlier this month Nancy Brown, the lead litigator in the SEC’s case, asked Judge Ramos if they could move right to summary judgement on the non-fraud claims of the case. Attorney Brown claimed it would streamline a trial and be efficient for the judge to rule on because with these kind of claims, that tie to when Ladd disclosed selling his MGT stock via a From 4, the government doesn’t have to prove Ladd’s intent to do any thing wrong. Brown’s move was bold and confident because it came while Judge Ramos still hadn’t decided on the motion to dismiss of the second amended complaint. According to people familiar with the case the discovery period is over which included the SEC taking defendants depositions. Ladd plans to fight the case so he can remain a public company CEO and won’t be settling any fraud charges, which the SEC is well aware of.
But at a hearing held today to argue if the SEC can even ask for summary judgement on those claims, Nancy Brown appeared to back down. This reporter, who attended the hearing, saw there was no argument made about summary judgment; instead Brown asked the judge for more time to decided how the SEC is going to move forward. In the judge’s motion to dismiss ruling this week he gave the SEC leeway to file another, this would be the third, amended complaint against Ladd. Attorney Brown said she has think it over for two weeks.
Here is where the SEC’s trial strategy is showing some cracks. Since the SEC didn’t finish discovery with Team Honig and went to an easy plea deal that banded some of Honig’s associates while still allowing Honig to trade in $PTE PolarityTE, they haven’t actually gotten any of his crew to admit they all traded as an undisclosed group of affiliates. The SEC settlements Team Honig made all only say the defendants don’t confirm or deny the charges. And given how all of team Honig appears to have plead the fifth in their SEC depositions it’s unclear how the SEC can prove Ladd knew they were acting as a group of affiliates and didn’t tell his shareholders about it. Now if the SEC had acted like real prosecutors and taken Barry Honig or John O’Rourke to trial and gotten guilty pleas or even forced them to admit guilt in the SEC settlement they’d be in a different boat. But that didn’t happen. So it will be interesting to watch if the SEC has some kind of surprise witness in their pursuit of Ladd. Ladd’s former business partner and tech legend, John McAfee, was recently arrested in Spain for tax evasion by the DOJ in case unrelated to this one.
According to a government witness in an other DOJ case tangentially tied to Honig the SEC has been trying to nail Honig for over a decade. The theme of charging them with trading as a group of undisclosed affiliates to manipulate stocks and allegedly commit fraud is actually something new the SEC finally figured out. Given the DOJ still hasn’t’ brought any charges against Barry Honig and his crew, which include Michael Brauser, Mark Groussman, Philip Frost, John Stetson, and John O’Rourke it doesn’t appear the government has made much of an impact on stopping these alleged securities fraud bad actors.
$MGTI currently trades on the OTC Markets for $0.11 cents.
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