SEC alleges former CEO of Florida-based company operating orthopedic, spine medical centers part of $3M fraud scheme: 5 things to know

Written by Laura Dyrda | November 15, 2018 | Print  |

The Securities and Exchange Commission brought new charges against Melbourne, Fla.-based First Choice Healthcare Solution's CEO, alleging participation in a multi-million dollar fraud scheme.

First Choice Healthcare Solutions includes three Florida-based medical centers focused on orthopedics and spine. 

Here are five things to know:

1. The SEC alleges First Choice Healthcare Solutions CEO Christian Romandetti, along with others, orchestrated a scheme to inflate the company's stock price from $1 per share to $3.40 per share. The complaint alleges from September 2013 to June 2016, the defendants attempted to disguise trading using multiple accounts and engaged in manipulative trading practices.

2. First Choice hired Elite Stock Research, a boiler room, to promote the company to "vulnerable investors," and in some cases individuals invested retirement savings.

3. The SEC claims Mr. Romandetti and the other defendants manipulated company stock to generate more than $3.3 million in illegal profits as well as in excess of $560,000 in kickbacks, which Mr. Romandetti pocketed.

4. The SEC seeks permanent injunctions for the defendants as well as a return of the gains with interest, civil penalties, penny stock bars and additional officer-and-director bars against Mr. Romandetti and three others.

5. In July 2017, the SEC charged Elite Stock Research, among 13 individuals, for using high-pressure sales tactics and lying about penny stocks to cheat investors out of around $10 million. This litigation is ongoing.

On Nov. 8, First Choice released third quarter financial results, reporting total revenue increased 26 percent over the same period last year to $97 million. However, the company also reported a $263,587 loss after spending $230,000 "exploring strategic initiatives." On Nov. 19, the company named CFO Phillip Keller interim CEO.

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