TRENTON, N.J. – The owner of a purported business consulting firm was sentenced today to 25 months in prison for operating a $1.1 million scheme that artificially inflated the stock price of a publicly traded company he controlled, U.S. Attorney Craig Carpenito announced.
James Farinella, 52, of Springfield, New Jersey, previously pleaded guilty before U.S. District Judge Anne E. Thompson to one count of conspiracy to commit securities fraud. Judge Thompson imposed the sentence today in Trenton federal court.
According to the documents filed in this case and statements made in court:
From June 2012 through December 2012, Farinella and others allegedly operated a scheme to profit by fraudulently inflate the prices of Pazoo Inc. (PZOO). 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.
Farinella and other conspirators allegedly inflated the price of those shares by orchestrating a series of trades between accounts they controlled to create the appearance that Pazoo stock was rising in price and heavily traded. In order to further inflate the prices, Farinella and his conspirators also disseminated 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 over 1,000 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.
In addition to the prison term, Judge Thompson sentenced Farinella to 3 years of supervised release.
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 sentencing. 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.r