New York securities attorney Darren Ofsink, once an active adviser to emerging growth companies seeking to go public through reverse mergers, pleaded guilty on Oct. 18 to one charge of conspiracy to commit securities fraud, for his role in the $86 million manipulation scheme of CodeSmart Holdings (ITEN).
The plea comes nearly two years after attorney Ofsink was arrested in a superseding indictment related an alleged pump-and-dump ring led by microcap financier A.J. Discala. Ofsink was one of the deal lawyers DiScala used to arrange bridge loans with microcap companies that were planning a reverse merger. At the time of his arrest in November 2015, Ofsink said he planned to fight the charges.
The guilty plea carries a sentence of up to five years in prison, but with the settlement Ofsink avoided charges that carried sentences of up to 20 years, and federal sentencing guidelines on the conspiracy to defraud charge of 15 to 20 years based on the size of the fraud.
Ofsink engineered the reverse merger that brought CodeSmart public in 2013 with the purchase of a public shell company called First Independence Corp. He later served as the company’s general counsel.
CodeSmart claimed to provide training in medical coding that would be required by the Affordable Care Act. The CEO of CodeSmart, Ira Schapiro, also pleaded guilty on Oct. 18 to the same charge as Ofsink.
CLICK HEADLINE FOR MORE>>
Fast-casual dining franchise company FAT Brands expects to close it’s $24 million Reg A offering as soon as Oct. 20, according to company insiders. The quick closing follows reports that the company attracted millions of committed capital on its first day after the Securities and Exchange Commission qualified the offering on October 3. The owner of Fatburger and Buffalo’s Café is selling two million shares at $12, with a minimum investment of $500, from institutional and retail investors. The deal is being sold by Tripoint Global Securities as the exclusive bookrunner.
The broker-dealer division of Chicago-based Zacks Investment Research, has been charged by the Securities and Exchange Commission for failure to supervise staff who traded on non-public material information. The action is a blow to the nascent Reg A research market, where Zacks has been the first and only traditional sell-side broker to offer equity research on Reg A issuers.
The recent successful Reg A+ offering and immediate Nasdaq listing by an electric utility vehicle startup offers a roadmap for other issuers seeking a quick path to public capital and trading liquidity.