James Farinella, Securities Fraud, New Jersey 2018

Grimy Times has learned that James Farinella, a 52-year-old man from Springfield, New Jersey, has pleaded guilty to operating a $1.1 million scheme that artificially inflated the stock price of a publicly traded company he controlled.

Farinella, who owned a purported business consulting firm, admitted to operating the scheme from June 2012 through December 2012. During this time, he and his co-conspirators allegedly orchestrated a series of trades between accounts they controlled to create the appearance that Pazoo Inc. stock was rising in price and heavily traded.

Pazoo had little or no real business operations, and when it started trading in June 2012, Farinella controlled 98 percent of the free-trading shares in Pazoo. The company’s stock price was artificially inflated by disseminating misleading promotional materials to lure investors to purchase the stocks, including touting Pazoo as a leading provider of nutritional supplements for people and their pets.

After inflating the price of the stock, Farinella and his conspirators sold large volumes of the stock to investors at the artificially inflated prices. The company’s stock price then dropped, causing victims of the scheme to suffer losses. The alleged stock manipulation scheme generated approximately $1.1 million in gross trading proceeds.

Farinella pleaded guilty to one count of conspiracy to commit securities fraud before U.S. District Judge Anne E. Thompson in Trenton federal court. The conspiracy to commit securities fraud count carries a maximum potential penalty of five years in prison and a $250,000 fine or twice the gross gain or loss from the offense. Sentencing is scheduled for February 5, 2019.

The U.S. Securities and Exchange Commission (SEC) has a civil complaint pending against Farinella. U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, with the investigation leading to today’s guilty plea. He also thanked the U.S. Securities and Exchange Commission’s New York Regional Office, under the direction of Marc P. Berger, for its assistance in this matter.

The government is represented by Assistant U.S. Attorney Justin S. Herring, Chief of the Cybercrimes Unit in Newark. The case is a reminder of the importance of regulating the stock market and holding individuals accountable for their actions.

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