Bobby Genovese surveys the property outside his Boca Raton residence.
Five years after market watchdogs first spotted suspicious trading in a Toronto-listed silver company, the top U.S. securities regulator has laid charges against the alleged promoter behind the stock manipulation scheme.
Bobby Genovese, better known as "Bobby G," is a citizen of Canada, lives in the Bahamas, has a residence in Florida and is alleged to have utilized offshore trading accounts to mask his activities. The Securities and Exchange Commission (SEC) levelled fraud charges against him related to "penny-stock promotion, manipulation and unlawful distribution" in the case of Liberty Silver Corp.
Shares of Liberty Silver were suspended from trading in the fall of 2012 after their price doubled in a month and their trading volume quadrupled in four weeks. Suspecting impropriety after the junior miner became worth $128-million despite spending a mere $1.5-million (U.S.) on exploration, regulators worried about a stock-promotion program.
In the SEC's complaint, the regulator targeted Mr. Genovese and his private firm B.G. Capital Group; he is alleged to have made more than $17.5-million in gross proceeds from the scheme.
According to the SEC, Mr. Genovese started acquiring shares in Liberty Silver in 2010, which traded over the counter in the United States with the ticker symbol LBSV.
"After pumping up the price of the shares through a promotional campaign he orchestrated and paid for, Genovese intended to sell a portion of his beneficially owned LBSV stock through an illegal unregistered distribution to generate funds to pay for a second, more elaborate promotion of LBSV, to repay personal loans, and to fund his extravagant lifestyle," the SEC alleged.
Mr. Genovese's lifestyle is documented on his personal website, which displays business and personal interests that have included leasing out a 154-foot Feadship yacht, purchasing and restoring a number of historic Canadian wooden boats, renovating his Muskoka cottage on Lake Rosseau north of Toronto and owning a polo team.
In 2008, he was also the lead character in his own reality show, Bobby G: Adventure Capitalist, which aired on the now defunct cable channel MOJO and whose theme song included the lyrics "more money than you and me, Bobby G." https://vimeo.com/67328794
Now 55 years old, Mr. Genovese's primary residence is Paradise Island, the Bahamas. B.G. Capital is a private Barbados company headquartered in Florida.
In an e-mail, Mr. Genovese denied any wrongdoing pertaining to Liberty Silver, arguing that a U.S. federal judge has already dismissed a similar civil case against him earlier in 2017. However, the judge merely ruled that the lawsuit did not qualify for class-action status and the SEC has now taken it on instead.
To make money off Liberty Silver, the SEC alleged Mr. Genovese paired up with Anastasios Belesis, the chief executive officer of New York-based John Thomas Financial, or JTF.
At the time, JTF was in need of capital and Mr. Genovese is said to have lent the firm $2-million.
In exchange, JTF agreed to promote Liberty Silver to its clients. The Liberty Silver shares it later sold to clients allegedly often came straight from Mr. Genovese, who unloaded them as the price rose.
Mr. Genovese is also alleged to have traded Liberty Silver shares between his own accounts, some of which were offshore, in order to "create a false impression of trading activity in LBSV, to increase its price and to induce other investors to purchase LBSV," according to the SEC.
As well, the SEC also alleged that Liberty Silver's share price may have gone up because Mr. Genovese paid newsletter writers to generate positive stories or blurbs about the company.
He also "subsequently made knowing or reckless false and misleading statements in press releases and e-mails under his and BGC's name that repeated the misleading claims made in the newsletters without disclosing that he had compensated the writers, and touted LBSV stock while hiding the fact that he was already selling his LBSV shares."
In one case, Mr. Genovese is alleged to have agreed to compensate a newsletter writer for the recommendation by paying for the purchase of $30,000 "designer stereo loudspeakers."
Mr. Belesis, the CEO of JTF, agreed this week to settle with the SEC for failing to inform his customers of several material facts, including that Mr. Genovese was a controlling shareholder of Liberty Silver as well as the source of some or all of the shares his clients would purchase.
As for the case against Mr. Genovese, the SEC has requested that it be heard by a jury.
Earlier this year, Liberty Silver relisted on the Canadian Securities Exchange, a rival to the Toronto Stock Exchange. According to its financial statements filed in March, the company has never earned any revenue and has an accumulated deficit of more than $16-million.
Tim Kiladze