Son & Mom Enjoined in Penny Stock Scheme

Penny stock frauds have long been a staple of SEC enforcement. Typically, these actions center on the trading of large numbers of penny stock which are not registered and may be manipulated as the sales take place. While the shares are often only valued at a few cents, the large volume of transactions often results in substantial profits for the defendants.

While there are so many of these cases they are almost “routine.” But the SEC’s most recent penny stock action has an unusual wrinkle – Mom or Mrs. Robinson. While son sold the unregistered shares to the unsuspecting public, he frequently got them from Mom who also became a relief Defendant. SEC v. Beck, Civil Action No. 2:22-cv-00812 (C.D. Cal.).

Named as defendant in the action is Michael Beck. Named as a relief defendant is Helen Robinson, or Mom.

Mr. Beck engaged in a fraud that centered on eight different penny stocks. Typically, Mr. Beck recommended the purchase of one or more of the stocks that he was involved with. In making that recommendation he did not tell investors that he intended to sell his shares at inflated prices to make a profit.

Mr. Beck repeatedly purchased large blocks of penny stocks and later tweeted that he would be selling them. He also would issue new stock recommendations to his followers – known as TeamBillionaire. That “team” would receive an email from Mr. Beck a few days before he emailed his stock recommendations. Select other parties also received the email. In some instances, Mr. Beck had third parties send an email to his followers.

Subsequently, Mr. Beck would begin selling his shares. He also sold Mom’s shares. During that process he would issue emails about the stock. Ultimately, Mr. Beck settled the action, consenting to the entry of a permanent injunction based on Securities Act Section 17(a) and Exchange Act Section 10(b). He was ordered to pay disgorgement, on a joint-and-several basis with Mrs. Robinson, in the amount of $572,270.00 and prejudgment interest in the mount of $112,062.32. Mr. Beck was, in addition, barred from participating in any penny stock offering for five years or trying to induce transactions in those shares. Mrs. Robinson was directed to pay disgorgement in the amount of $386,732 on a joint-and-several basis with her son, disgorgement in the amount of $386,732.00 and prejudgment interest in the amount of $75,730.14. See Lit. Rel. No. 26003 (May 13, 2024).