SHOCKER! Stock Broker Paid CASH KICKBACKS To Push Fake Energy Stock!

SEC v. Richard Brown, Richard St. Julien, Christopher Castaldo, et al. — U.S. Securities and Exchange Commission Litigation Release No. 26204, dated December 23, 2024.

Richard Brown, a registered representative, was involved in a scheme to defraud investors by recommending ForceField Energy stock in exchange for undisclosed cash kickbacks. He agreed to a final judgment permanently enjoining him from securities law violations and ordering disgorgement of $30,000, with payment satisfied by a parallel criminal proceeding.

In Plain English

Imagine a stockbroker who secretly gets paid extra money to recommend a specific company's stock to their clients. This broker, Richard Brown, did just that with ForceField Energy stock. He didn't tell his clients he was getting paid extra to push the stock. Now, a court has ordered him to stop doing this and to pay back the money he improperly earned.

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. The Company and the Goal ForceField Energy Inc. was a public company whose stock was traded on NASDAQ. Its ex-Chairman, Richard St. Julien, orchestrated schemes to defraud investors by artificially inflating the stock's value.
2. Hiring a Promoter Starting in 2014, Richard Brown, a registered representative, was involved in a scheme where he was paid cash kickbacks. These payments were made in exchange for recommending ForceField Energy stock to his customers.
3. Undisclosed Kickbacks Brown's role was to buy ForceField Energy shares in his customers' accounts. Crucially, he did not disclose to these customers that he was receiving cash kickbacks for these recommendations.
4. Violating Securities Laws Brown's actions were alleged to violate Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, along with Rule 10b-5. These laws prohibit fraudulent conduct and deceptive practices in securities markets.
5. Concealment Tactics To hide the illegal kickbacks, St. Julien often paid through an offshore nominee he controlled. Some participants, including potentially those involved with Brown's scheme, also used disposable phones and encrypted messaging apps to communicate.
6. SEC Complaint Filed The SEC filed a complaint on May 3, 2016, against St. Julien and several other defendants, including Richard Brown, detailing these fraudulent schemes.
7. Final Judgment Against Brown On December 23, 2024, the U.S. District Court for the Eastern District of New York entered a final judgment against Richard Brown by consent.
8. Injunction and Disgorgement As part of the judgment, Brown agreed to be permanently enjoined from violating the charged provisions of securities laws. He was also ordered to disgorge $30,000 in ill-gotten gains plus prejudgment interest.
9. Criminal Case Satisfaction The payment of Brown's disgorgement and interest was deemed satisfied by a restitution order in a parallel criminal proceeding, United States v. Mitchell, et al.
10. Conclusion of SEC Litigation This final judgment against Brown concluded the SEC's litigation in this specific matter, following earlier judgments against other defendants in 2016 and 2017.

The Enforcement Action

On December 23, 2024, the U.S. District Court for the Eastern District of New York entered a final judgment against Richard Brown, enjoining him from violating certain provisions of the federal securities laws. According to the SEC's complaint, starting in 2014, Brown was involved in a scheme to deceive investors into buying shares of ForceField Energy Inc. ("ForceField Energy"). The SEC alleges that Brown was paid cash kickbacks in exchange for recommending and buying shares of ForceField Energy stock in his customers' accounts without disclosing to customers that he was being paid cash kickbacks. The SEC's complaint charged Brown with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. On December 23, 2024, the Court entered a final judgment against Brown by consent in which he agreed to be permanently enjoined from violations of the charged provisions and to disgorge $30,000 in ill-gotten gains and prejudgment interest thereon, the payment of which was deemed satisfied by the restitution order in the parallel criminal proceeding, United States v. Mitchell, et al., Crim. No. 16-234 (BMC) (E.D.N.Y.). In 2016 and 2017, the Court previously entered injunctions against Christopher Castaldo, Gerald J. Cocuzzo, Naveed A. Khan, Herschel (Tres) Knippa, Maroof Miyana, Pranav V. Patel, Louis F. Petrossi, and Richard St. Julien. Today's judgment against Brown concludes the SEC's litigation in this matter.

Named in this action: Richard Brown, Richard St. Julien, Christopher Castaldo, Gerald J. Cocuzzo, Naveed A. Khan, Herschel (Tres) Knippa.

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