Disbarred Lawyer Flooded Penny Stocks With 90 Fraudulent Opinion Letters!

SEC v. Randell R. Torno, Brian D. Shibley, William A. Justice, et al. — U.S. Securities and Exchange Commission Litigation Release No. 26344, dated July 10, 2025.

The SEC charged four individuals, including three former CEOs of penny-stock companies and a disbarred attorney, for their involvement in an alleged $112 million pump-and-dump scheme. The scheme, orchestrated by Philip Verges, involved misleading disclosures about company control and financial statements. The CEOs settled with the SEC, agreeing to injunctions, bars, and monetary penalties, while the disbarred attorney also settled, facing future disgorgement and penalties.

In Plain English

Imagine someone is selling a special type of candy. They tell people it's super rare and valuable, but they're actually making it up and controlling the whole supply. They get their friends, who are like the 'managers' of the candy shop, to sign papers saying everything is fine, even though they know it's not true. They also get a 'lawyer' who isn't allowed to practice law anymore to sign off on fake paperwork. The SEC stepped in to stop this trickery and make them pay for misleading everyone.

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. Orchestrating the Scheme From June 2017 to June 2022, Philip Verges allegedly directed a pump-and-dump scheme involving penny stocks, aiming to defraud investors of approximately $112 million.
2. Misleading Disclosures CEOs of penny-stock companies, including William A. Justice, Brian D. Shibley, and Randell R. Torno, allegedly signed or allowed their signatures on disclosure statements they knew or should have known were false. These statements concealed Verges's control over the companies.
3. Fabricated Financial Statements The disclosure statements published on a penny stock trading platform contained materially false and misleading information, particularly regarding who prepared the financial statements, obscuring the true nature of the issuers' financial health and control.
4. Facilitating Share Issuances At Verges's direction, the CEOs executed documents that allowed shares to be issued to Verges's nominees. They allegedly failed to exercise reasonable care in verifying the appropriateness and accuracy of these share issuances.
5. Disbarred Attorney's Involvement Keith A. Rosenbaum, a disbarred California attorney, allegedly authored at least 17 attorney opinion letters for one of Verges's nominees after his suspension and at least 73 more after his disbarment.
6. Continued Legal Opinion Letters These opinion letters, issued by Rosenbaum despite his disbarment, likely served to legitimize the penny stock issuers and their shares, aiding in the scheme to deceive investors.
7. SEC Investigation and Charges The SEC previously charged Philip Verges and others in September 2023. On July 1, 2025, the SEC filed a complaint in the Northern District of Texas charging Justice, Shibley, Torno, and Rosenbaum for their roles in the scheme.

The Enforcement Action

On July 1, 2025, the SEC charged William A. Justice, Brian D. Shibley, and Randell R. Torno, former CEOs of penny-stock companies, and Keith A. Rosenbaum, a disbarred attorney, for their roles in an alleged $112 million pump-and-dump scheme orchestrated by Philip Verges. The CEOs allegedly signed misleading disclosures and facilitated share issuances without due care. Rosenbaum allegedly authored numerous attorney opinion letters after being disbarred. The CEOs, without admitting or denying, consented to final judgments permanently enjoining them, imposing penny-stock and officer-and-director bars. Torno was ordered to pay disgorgement of $22,398.08 plus $2,011.92 in interest. Torno and Shibley were each ordered to pay a $35,000 civil penalty. Rosenbaum, without admitting or denying, consented to a bifurcated settlement including permanent injunctions, disgorgement, prejudgment interest, civil penalties, and a penny-stock bar to be resolved later.

Named in this action: Randell R. Torno, Brian D. Shibley, William A. Justice, Keith A. Rosenbaum.

Original SEC litigation release ↗ · Browse all cases