Andrew DeFrancesco, Marlio Mauricio Diaz Cardona, Carlos Felipe Rezk, Nikola Faukovic, and Catherine DeFrancesco
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25771 / July 7, 2023
Securities and Exchange Commission v. Andrew DeFrancesco, Marlio Mauricio Diaz Cardona, Carlos Felipe Rezk, Nikola Faukovic, and Catherine DeFrancesco, No. 23-civ-00131 (S.D.N.Y., filed January 6, 2023)
SEC Obtains Final Judgments Against Former Public Company Chairman and Two Others in Fraudulent Filings and Pump-And-Dump Scheme
On July 5, 2023, the U.S. District Court for the Southern District of New York entered a final judgment on consent against Andrew DeFrancesco, the former Chairman of Cool Holdings, Inc., for his role in a scheme involving false statements and omissions of material information in filings with the Commission, as well as a fraudulent pump-and-dump of Cool Holdings’ stock. On June 16, 2023, the Court entered final judgments on consent against two other defendants in the case, Nikola Faukovic and Catherine DeFrancesco.
According to the SEC’s complaint, filed on January 6, 2023, Andrew DeFrancesco was the “chief architect of the scheme” in which the false filings, including misstatements and omissions about a critical business relationship, masked Cool Holdings’ perilous financial condition and future prospects. The complaint further alleges that Andrew DeFrancesco and others arranged for the publication of a series of fraudulent promotional articles about Cool Holdings that Andrew DeFrancesco secretly funded. In addition, according to the complaint, with Faukovic’s assistance, Andrew DeFrancesco secretly sold hundreds of thousands of Cool Holdings shares, which he held in the name of nominee entities. Andrew DeFrancesco and his ex-wife Catherine DeFrancesco allegedly concealed his ownership of Cool Holdings shares, including by filing false beneficial ownership reports with the SEC.
Andrew DeFrancesco consented to entry of a final judgment permanently enjoining him from violating Sections 5 and 17(a) of the Securities Act of 1933 and Sections 10(b), 13(d) and 16(a) of the Securities Exchange Act of 1934 and Rules 10b-5, 13d-1(a) and 16a-3 thereunder. The final judgment ordered him to pay disgorgement and prejudgment interest in the amount of $1,276,070.49, and a civil penalty of $1,737,224.52. Andrew DeFrancesco was also barred from serving as an officer or director of a public company.
Faukovic consented to the entry of a final judgment permanently enjoining her from violating Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and ordering her to pay disgorgement and prejudgment interest in the amount of $14,350.32, and a civil penalty of $111,614. Catherine DeFrancesco consented to the entry of a final judgment permanently enjoining her from violating Section 13(d) of the Exchange Act and Rule 13d-1(a) thereunder, and ordering her to pay a civil penalty in the amount of $122,782.
The SEC’s litigation against defendants Marlio Mauricio Diaz Cardona and Carlos Felipe Rezk continues, and is being conducted by David Stoelting, Alexander Levine, Mao Yu Lin, and Melissa Coppola of the New York Regional Office; Jason Schall of the Home Office; and Katherine Bromberg and Danielle Srour of the Retail Strategy Task Force. For further information, see Litigation Release No. 25610, January 6, 2023.