Penny Stock Fraudster Busted AGAIN! Already Barred, He Did It All Over!

SEC v. Petar Dimitrov Mihaylov — U.S. Securities and Exchange Commission Litigation Release No. 26199, dated December 19, 2024.

The SEC secured a final judgment against Petar Dimitrov Mihaylov for his role in a cross-border penny stock fraud scheme that generated over $145 million. Mihaylov, a repeat offender, used offshore accounts to conceal his beneficial ownership and failed to register stock sales. The judgment includes injunctive relief, a penny stock bar, an officer/director bar, and monetary sanctions.

In Plain English

Imagine someone is selling shares of small companies, like selling rare collectibles. This person, Petar, was caught selling shares of many small companies, making over $145 million. He used secret accounts overseas to hide that he was the real seller. He had been warned before not to do this, but he did it again. Now, a judge has ordered him to stop, banned him from selling penny stocks, and made him pay back the money he made, plus interest and a penalty.

Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.

How the Alleged Scheme Worked

1. Concealing Ownership Petar Dimitrov Mihaylov, along with other defendants, participated in a scheme from 2006 to 2020. Mihaylov used offshore accounts and front companies to hide the fact that he was the one benefiting from selling stock.
2. Manipulating Penny Stocks Mihaylov partnered with others in at least two 'pump-and-dump' frauds involving penny stock issuers Steampunk Wizards Inc. and Cantabio Pharmaceuticals Inc. He also conducted at least one other fraudulent 'pump and dump' involving Lifelogger Technologies Corp.
3. Failing to Disclose As part of the scheme, Mihaylov failed to disclose his beneficial ownership of the stocks he was trading. He also did not register his stock sales as legally required, which is a critical step for legitimate public offerings.
4. Ignoring Prior Warnings Crucially, Mihaylov had previously been permanently enjoined from similar conduct in an earlier SEC penny stock fraud enforcement action. Despite this, he continued to engage in fraudulent activities.
5. SEC Files Complaint On April 14, 2022, the SEC filed a complaint in the U.S. District Court for the Southern District of New York, charging Mihaylov and seven other defendants residing outside the U.S. with participating in the scheme.
6. Defendant Consents to Judgment Mihaylov consented to the entry of a final judgment. This judgment permanently enjoins him from future violations of securities laws, imposes a penny stock bar, and a permanent bar from serving as an officer or director of any public company.
7. Monetary Sanctions Ordered The final judgment orders Mihaylov to pay disgorgement of $1,011,600, prejudgment interest of $304,466, and a civil penalty of $1,011,600, totaling over $2.3 million in financial penalties.

The Enforcement Action

On December 18, 2024, the SEC obtained a final judgment against Petar Dimitrov Mihaylov, a Bulgarian citizen, for his role in a cross-border penny stock fraud scheme spanning at least 2006-2020 that generated over $145 million in illegal sales of stock in at least 17 microcap companies. The SEC's complaint, filed April 14, 2022, charged Mihaylov and seven other foreign-based defendants with violating registration and antifraud provisions. Mihaylov, a recidivist who had previously been permanently enjoined from similar conduct, consented to the judgment, which includes injunctive relief, a penny stock bar, an officer/director bar, disgorgement of $1,011,600, prejudgment interest of $304,466, and a civil penalty of $1,011,600. This is the first judgment entered in the case; litigation is ongoing against the remaining defendants.

Named in this action: Petar Dimitrov Mihaylov.

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