The Securities and Exchange Commission, in a civil complaint, charged Midtown Partners broker Kevin Patrick Gillespie and four others in a series of microcap fraud schemes that netted more than $10 million in illicit proceeds, alleging that Gillespie and others fraudulently manipulated penny stocks, the scheme unraveling when one of the defendants attempted to coordinate the group's pump-and-dump price manipulation by communicating with an undercover FBI agent who was merely pretending to be a co-conspirator in an effort to thwart the fraud.
SEC Complaint #18CV1530 BEN JLB
According to the SEC complaint, filed in federal court in the Southern District of California, Gillespie (CRD #2485051) and fellow defendants Gannon Giguiere, Oliver-Barrett Lindsay, Andrew Hackett, and Annetta Budhu coordinated matched trading and manipulated prices in three penny stocks through fraudulent pump-and-dump schemes.
The SEC identified the penny stock issuers as Kelvin Medical, Inc. (KVMD, a purported medical supply company), Arias Intel Corp (aka First Harvest Corp aka American Riding Tours Inc., ASNT, a purported Nevada motorcycle tour company that then became a digital media company), and Eco Science Solutions, Inc. (ESSI, a purported technology company focused on the cannabis industry).
The Complaint states that Gillespie, who served as Arias Intel Corp (First Harvest Corp and First Harvest Opportunity Fund 1)'s chief executive officer, worked with Budhu and Hackett to pump-and-dump the ASNT stock in 2017, with Gillespie causing ASNT to issue Hackett a sham $300,000 convertible promissory note while asking a witness—who was working with the FBI—to promote ASNT's stock on a website called TheMoneyStreet.com in order to solicit investors during the scheme's "pump" phase.
During this time, Gillespie purportedly effected a reverse merger between ASNT and Cannavoices, Inc., a private company Gillespie controlled, causing Cannavoices shareholders to exchange their shares for shares of ASNT. In describing the shell company of ASNT, the SEC also implicated other entities which entered into share purchase agreements and other transactions with ASNT, including Baywall Inc. and FreeLife Investments, Inc.
Taking it a step further, Hackett allegedly met with an undercover FBI agent to further coordinate the fraud, which took place over the holiday break in December 2017 and January 2018.
The findings also indicate similar manipulations, including a matched trading scheme, in Kelvin Medical's stock between 2017 and 2018, as defendants transacted some 3 million shares during the relevant period, while pumping KVMD's share price from zero to $1.20.
The SEC says the group used TheMoneyStreet.com to promote the KVMD stock in anticipation of the planned "dump" phase of the fraudulent scheme, which the SEC interrupted based on the FBI's information, just prior to the planned liquidation.
As for cannabis tech company Eco Science Solutions, Giguiere purportedly promoted ESSI on TheMoneyStreet all while actively liquidating his own shares, thus earning more than $8.5 million in illicit proceeds.
SEC-New York Director Marc P. Berger called the defendants "stock traders [who] hijacked companies and manipulated the market to enrich themselves at the expense of the investing public," while the US Attorney's Office for the Southern District of California, in announcing criminal charges, wrote, "These fraud schemes victimize all investors and compromise the integrity of our financial markets."
The US Attorney's office also brought a criminal complaint against Gillespie.
According to his BrokerCheck file, Gillespie in 1994 was charged with a felony in connection with leased property, and a misdemeanor in 1998 for writing a worthless check. Two customer disputes in the early 2000s settled for $125,000 and alleged unauthorized trades, unsuitability, churning, excess commissions, misrepresentation, and failure to supervise. Most recently, Gillespie was named on a series of liens regarding a family member's unsatisfied car payments.
Prior to joining Midtown Partners & Co., Gillespie was registered with JP Turner & Company, LLC, of Tampa, Florida.
Additional employments in Gillespie's BrokerCheck report include American Riding Tours - First Harvest Corp (Las Vegas, NV), and Tampa-based First Harvest Real Estate Fund LP, The Great American Rolling Paper Co., Zoe Milan Studio, First Harvest Real Estate Fund Management, 380 Lexington Inc., First Harvest Acquisition Corp., Watch Tower Masterpieces, Cannavoices Inc., and Lexington Tech Ventures Fund.
If you have invested with Kevin Patrick Gillespie or with any registered broker or financial adviser who has solicited or unsuitably recommended penny stocks that dramatically lost their value, leaving you to absorb the losses as part of a fraudulent pump-and-dump price manipulation scheme, or whose misrepresentations and omissions of material facts have proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.