Christopher Esposito, the officer and director of mobile marketing firm Code2Action, was charged on January 7 in connection with spending more than $50,000 in investor funds to cover his own personal expenses. Between August 2019 and February 2020, Esposito, 55, of Everett, allegedly sold shares of his company to shareholders at “sub-penny prices.”
According to federal law enforcement officials, Esposito “deliberately misled prospective investors about Code2Action’s plan and ability to complete a reverse merger.” According to the U.S. Securities and Exchange Commission (SEC), a reverse merger involves a public company acquiring a private company in a manner that allows the private company to circumvent the complex process of going public.
Esposito allegedly told the investors that the reverse merger would allow them to sell their shares at a profit. In addition, he allegedly misappropriated approximately $57,000 to pay personal expenses. Esposito also never told prospective investors that the SEC had previously obtained a final judgment against him for securities fraud.
Esposito has since agreed to plead guilty to one count of securities fraud. Under federal law, he could face up to 20 years in prison followed by three years of supervised release and a $5 million fine.