An Everett man pleaded guilty on April 12, 2023, to exerting secret control over a Massachusetts-based company, Cannabiz Mobile, Inc., as part of a “pump-and-dump” securities fraud scheme. Christopher R. Esposito, 56, pleaded guilty to one count of securities fraud before U.S. District Court Judge Patti B. Saris, who scheduled sentencing for July 26, 2023. Esposito was charged in August 2022.
Esposito and a co-conspirator, Anthony Jay Pignatello, worked together between 2012 and 2015 to conceal their control over Cannabiz Mobile, Inc. and to use backdated promissory notes to fraudulently obtain free-trading shares in the company. Among other steps taken to conceal their control, Esposito caused another individual to be installed as the company’s chairman, president and CEO. In reality, the executive reported to Esposito. Esposito and Pignatello then arranged for a promotional campaign in October 2014 to artificially inflate the value and trading volume of Cannabiz Mobile’s stock so that they could secretly sell their shares. In total, between September 2014 and February 2015, Esposito personally sold over 1.3 million shares fraudulently obtained as part of the scheme.
Pignatello separately pleaded guilty in March 2021 to conspiracy to commit securities fraud for his role in the scheme. He is scheduled to be sentenced on Sept. 12, 2023, before U.S. District Court Judge George A. O’Toole Jr.
The charging statute for securities fraud provides a sentence of up to 20 years in prison, three years of supervised release and a fine of $5 million. The charging statute for conspiracy to commit securities fraud provides for a sentence of up to five years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain or loss from the offense. Sentences are imposed by a federal district court judge based on the U.S. Sentencing Guidelines and statutes that govern the determination of a sentence in a criminal case.
U.S. Attorney Rachael S. Rollins and the Special Agent in Charge of the FBI’s Boston Division, Joseph R. Bonavolonta, made the announcement. Assistant U.S. Attorney James R. Drabick of Rollins’ Securities, Financial & Cyber Fraud Unit is prosecuting the case.