misrepresentations and omissions in relation to unsuitable investments in penny stocks, and paid

Transcription

1 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 1 of 28 PageID #: 224 JMK:ALC/TJS/KTF F.#2014R01614 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK TILED.CLERK 20I7SEP2O PH«)sOO UO r, I ;- * r.; 7 r; (; 7 T EASTERM DISTRICT ur i I \.<)\ji UNITED STATES OF AMERICA - against - CHRIS MESSALAS, BORIS RUBIZHEVSKY, DMITRIOS ARGYROS, also known as "Jimmy," and ANDREAS KARASAMANIS, SUPERSEDING INDICTMENT Cr. No (S-l) (RRM) (T. 18, U.S.C., 371, 981(a)(1)(C), 982(a)(1), 982(b)(1), 1956(a)(2)(A), 1956(li), 2 and 3551 et seq.: T. 21, U.S.C., 853(p); T. 28, U.S.C., 2461(c)) Defendants. X THE GRAND JURY CHARGES: INTRODUCTION At all times relevant to this Indictment, unless otherwise indicated: I. Uie Defendants 1. The defendant CHRIS MESSALAS, a resident of Staten Island, New York, formerly was a securities trader and one of the principal owners of LeadDog Capital Markets, LLC, formerly known as LeadDog Capital Partners, Inc. ("LeadDog"), a hedge fund that fqcused on microcap public companies. In or about 2005, MESSALAS settled a customer complaint with the National Association of Securities Dealers ("NASD") alleging that he made misrepresentations and omissions in relation to unsuitable investments in penny stocks, and paid $45,000 in the settlement. In approximately late 2012, the United States Securities and Exchange Commission (the"sec") sanctioned MESSALAS, LeadDog and LeadDog's.general counsel for violating the antifraud provisions of the federal securities laws by making material

2 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 2 of 28 PageID #: 225 misrepresentations and omissions to investors and potential investors in a hedge fund, including omissions relating to MESSALAS's disciplinary history in the securities industry. The SEC also barred MESSALAS from association with any broker, dealer, or investment adviser and permanently prohibited him from serving or acting as an employee, ofihcer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for a registered investment company or affiliated person of such investment adviser, depositor, or principal imderwriter. 2. The defendant BORIS RUBIZHEVSKY, a resident of Closter, New Jersey, was the Director and Chief Executive Officer ("CEO") of BioCube from approximately August 2009 to November RUBIZHEVSKY also held management positions in one or more other companies in which the defendant CHRIS MESSALAS or LeadDog was an investor. 3. The defendant DIMITRIOS ARGYROS, also known as "Jimmy," a resident of Ho-Ho-Kus, New Jersey and recently residing temporarily in Cyprus, was a professional anti-money laundering consultant. 4. The defendant ANDREAS KARASAMANIS, a citizen of Cyprus, was an offshore incorporator and the Chief Executive Officer of KappaTrust, a company based in Limassol, Cyprus, that marketed itself on its website as providing "international tax planning, trustee and company administration services." In addition, KARASAMANIS purported to conduct business through Stelx FZE (which also appeared to use the name Stelx Management Services), a company purportedly based in Dubai, United Arab Emirates. II. Relevant Regulatory Principles and Definitions 5. The term "beneficial owner" was defined under the rules of the SEC. It included any person who directly or indirectly shared voting power or investment power (i.e., the

3 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 3 of 28 PageID #: 226 power to sell a security). When a person or group of persons acquired beneficial ownership of more than five percent of a voting class of a company's equity securities registered under Section 12 of the Securities Exchange Act of 1934 (the"exchange Act"), they were required to file a Schedule 13D with the SEC. A Schedule 13D reported the acquisition and other information within 10 days after the purchase and, in addition to being filed with the SEC, was provided to the company that issued the securities and each exchange on which the securities were traded. Any material changes in the facts contained in the schedule required a prompt amendment. In certain circumstances, a person was eligible to file an abbreviated, "short form" Schedule 13G with the SEC in lieu of a Schedule 13D. Specifically, persons, other than qualified institutional investors, may file a Schedule 13G instead of Schedule 13D only if the beneficial ownership is less than 20 percent of the subject class of equity securities and a certification has been given that such securities were not acquired and were not being held for the purpose of or with the effect of changing or influencing the control of the issuer or in connection with or as a participant in any transaction having that purpose or effect. 6. An "affiliate" of a publicly traded company generally referred to a person, such as an executive officer, director or large shareholder, in a relationship of control with the issuer of securities. Affiliates were required to abide by certain rules in selling stock. One such rule, contained in Rule 144 of Section 5 of the Securities Act of 1933 (the "Securities Act"), was that an affiliate cannot sell more than one percent of the relevant class of the company's outstanding shares in a 90-day period. A person who owned or controlled 10 percent or more of a company's stock was commonly understood as being an affiliate of the company. 7. The term "nominee" in the securities fraud context referred to a person or firm into whose name securities or other properties were transferred in order to facilitate

4 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 4 of 28 PageID #: 227 transactions, while concealing the customer as the actual owner. A "nominee account" was a type of account in which a stockbroker held shares belonging to clients in the name of a sham entity or another individual. The use of nominees and nominee accounts was designed to conceal the true ownership interest of the customer. 8. "Microcap" or "penny" stocks referred to stocks of publicly traded U.S. companies that have a low market capitalization. Microcap stocks were often subject to price manipulation because they were thinly traded and subject to less regulatory scrutiny than stocks that traded on notable exchanges. Additionally, large blocks of microcap stock were often controlled by a small group of individuals, which enabled those in the group to control or orchestrate manipulative trading in those stocks. 9. The term "pink sheets" referred to an over-the-counter ("OTC") market that connected broker-dealers electronically. Unlike companies listed on a national stock exchange, companies quoted on the pink sheets system did not need to meet certain minimal requirements or file periodic reports with the SEC. 10. The term "stop sign" referred to a symbol displayed for a company on the pink sheets system that signified the company was defunct or had not filed within the last six months any information with either the SEC or the OTC Disclosure and News Service, a service that allowed companies to immediately distribute information to investors and other market participants. 11. A "pump and dump" scheme was a scheme in which a group of individuals who controlled the free trading or allegedly unrestricted shares, also referred to as the "float," of a microcap company fraudulently inflated the share price and trading volume of the targeted public company through, inter alia, wash and matched trades, false and misleading SEC

5 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 5 of 28 PageID #: 228 filings, press releases and paid stock promotions. When the target company's share price reached desirable levels, the individuals sold their free trading shares for substantial financial gain. 12. Wash trades were purchases and sales of securities that matched each other in price, volume and time of execution, and involved no change in beneficial ownership. For example, a wash trade took place when Investor A bought 100 shares at $5.00 per share of Company A through Broker A while simultaneously selling 100 shares at $5.00 per share of Company A through Broker B. Matched trades were similar to wash trades but involved a related third person or party who placed one side of the trade. For example, a matched trade took place when Investor A bought 100 shares at $5.00 per share of Company A through a broker, while Investor B, who coordinated with Investor A, simultaneously sold 100 shares at $5.00 per share of Company A through a broker. Both wash trades and matched trades were used to create the appearance that the stock price and volume rose as a result of genuine market demand for the securities. 13. The Foreign Account Tax Compliance Act (the"fatca") was a federal law enacted in March 2010 that targeted tax non-compliance by U.S. taxpayers with foreign accounts. FATCA required U.S. persons to report their foreign financial accounts and offshore assets. Additionally, FATCA required foreign financial institutions to report to the Internal Revenue Service ("IRS") certain financial information about accounts held by U.S. taxpayers or foreign entities in which U.S. taxpayers held a substantial ownership interest. III. Relevant Entities and Co-Consnirators 14. BioCube, Inc. ("BioCube"), with its purported principal place of business in Phoenix, Arizona, was a public company incorporated on or about July 30, 2007 as Greenleaf

6 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 6 of 28 PageID #: 229 Forest Products, Inc., whose business was identified in filings with the SEC, in sum and substance, as the importation of pine wood blocks from Brazil and Argentina that were used for civil architecture purposes. Since approximately 2010, BioCube has purported to have a series of different business purposes. In BioCube's last quarterly report, a Form 10-Q, which was filed with the SEC on or about February 11, 2015 and applied to the quarterly period ending on or about April 30,2013, BioCube identified its business as "to market and distribute Li-ion batteries in North America." In or about and between July 2014 and June 2016, two of BioCube's independent auditors were dismissed, with the most recent auditor's dismissal occurring on or ^ about June 7, Shortly thereafter, on or about August 11, 2016, BioCube filed a Form 15 with the SEC that served as BioCube's certification that its common stock was held of record by fewer than Exchange Act Rule 12g-4(a)(l)'s threshold number of persons, and its notice that, on that basis, BioCube was terminating its conmion stock's registration and its duty to file reports with the SEC. In its subsequent OTC pink sheets disclosure, filed in amended form on or about December 19,2016, BioCube stated that it had 64,342,700 common shares outstanding as of December 19,2016, and summarized its business operations as follows: BioCube, Inc. (the "Company") is a technology company with a focus on environmental and technical infrastructure projects related to homeland security, renewable energy and clean technologies. The Company through its majority-owned subsidiary lut Technologies Inc. ("lut") plans to market and distribute in North America devices for the detection of THC and marijuana on a user's breath; devices for industrial and environmental monitoring; and other devices for solutions in homeland security and building protection based upon trace gas analyzers. The Company previously had operated several other marketing and distribution businesses for electrical surge protection devices; aerosol based decontamination systems; and batteries utilizing a proprietary and patented process. These businesses were terminated as each new venture was commenced.

7 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 7 of 28 PageID #: Institut fw Umwelttechnologien GmbH ("lut Medical"), with its purported principal place of business in Berlin, Germany, was a company organized under German law that, among other things, marketed itself as developing explosives detection technology. 16. lut Technologies Inc. ("lut Technologies"), with its purported principal place of business in Florham Park, New Jersey, was incorporated in New Jersey on or about December 17, Blackwater Capital Markets Limited ("Blackwater"), with its purported principal place of business in New York, New York, was registered with the New York State Department of State on or about March 27,2014. The address of Blackwater provided in connection with Blackwater's registration was the same as that of the defendant CHRIS MESSALAS's residence. As of approximately February 3, 2015, Blackwater marked itself on its website as "a specialized Family Office" based in New York, "investing in a broad range of strategies which include distressed debt, convertible debentures, straight equity, bridge and mezzanine financing, reverse mergers and equity listings on numerous exchanges with Global reach in Athens, Luxembourg, New York, Paris, London, Zurich, Geneva, Frankfurt, Dubai, Hong Kong, and Singapore." As of approximately June 2017, the domain name for Blackwater's website was registered to MESSALAS. 18. Admetus Capital Group LLC ("Admetus Capital"), with its purported principal place of business in Philadelphia, Pennsylvania, was created on or about February 27, According to a Schedule 13G filed with the SEC on or about October 14,2015, Admetus Capital was the owner of 5,250,000 shares of BioCube.

8 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 8 of 28 PageID #: Agite Family Office Ltd was the name of an offshore entity that the defendant ANDREAS KARASAMANIS used in furtherance of the money laimdering scheme alleged herein. 20. Co-Conspirator 1, an individual whose identity is known to the Grand Jury, was an attorney and the Managing Member of Admetus Capital. In that capacity, Co- Conspirator 1 electronically signed the Schedule 130 that Admetus Capital filed with the SEC on or about October 14, IV. The BioCube Stock Manipulation Scheme 21. In or about and between October 2015 and April 2017, the defendants CHRIS MESSALAS and BORIS RUBIZHEVSKY, together with Co-Conspirator 1 and others, engaged in a scheme to defraud investors and potential investors in BioCube by concealing MESSALAS's beneficial ownership and control of BioCube's shares. MESSALAS, RUBIZHEVSKY and Co-Conspirator 1 engaged in this scheme because MESSALAS wanted to exercise control over the price and trading of BioCube's stock. 22. The defendant CHRIS MESSALAS, together with others, facilitated this pump and dump scheme by not publicly identifying himself as having any position at or formal arrangement with BioCube, and concealing from BioCube investors and potential investors as well as the SEC the total amount of BioCube shares MESSALAS controlled. 23. For example, on or about January 6, 2011, two LeadDog entities (the "LeadDog Entities") jointly filed a Schedule 13G with the SEC, which was electronically signed by the defendant CHRIS MESSALAS in his capacity as Managing Member. The Schedule 13G stated, among other things, that the LeadDog Entities, and by extension MESSALAS, beneficially owned a total of 2,819,967 BioCube shares, and held warrants and options to 8

9 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 9 of 28 PageID #: 232 purchase additional shares and convertible debentures that could be converted into additional shares at specified prices. The Schedule 13G also stated that the LeadDog Entities' combined beneficial ownership of BioCube shares could not exceed 9.99% of BioCube's then issued and outstanding shares, including the shares issuable upon exercise of the warrants, options or debentures. On or about February 14,2012, the LeadDog Entities jointly filed with the SEC an amendment to their Schedule 13G (the"amended Schedule 13G"), which again was electronically signed by MESSALAS in his capacity as Managing Member. The amended Schedule 13G stated, among other things, that the LeadDog Entities, and by extension MESSALAS, now beneficially owned a total of 2,528,007 BioCube shares, and held warrants and options to purchase more BioCube shares and a higher amount of convertible debentures than before. The amended Schedule 13G included the same language about the 9.99% beneficial ownership cap. 24. After the filing of the amended Schedule 13G, LeadDog's SEC filings regarding BioCube were never amended further. The defendant CHRIS MESSALAS never filed a Schedule 13D or Schedule 13G to account for BioCube shares he controlled in addition to the LeadDog Entities' shares. As a result of these and other acts and omissions, MESSALAS, together with others, fraudulently concealed from BioCube investors and potential investors as well as the SEC the total amount of BioCube shares he controlled. 25. The defendant CHRIS MESSALAS also used his relationships with BioCube management, his co-conspirators and others, some of whom held notes or debentures that were convertible into BioCube stock, to ensure that he controlled millions of BioCube shares that were not owned in his own name. Such shares were nominally owned by, for example.

10 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 10 of 28 PageID #: 233 MESSALAS's co-conspirators, Admetus Capital and a trust whose identity is known to the Grand Jury (the "Relative Trust"). A. The Defendant CHRIS MESSALAS's Conversations with the CW 26. Beginning in or about 2015, a cooperating witness (the"cw") began meeting and speaking with the defendant CHRIS MESS ALAS and consensually recorded their conversations, all at the direction of federal law enforcement agents. 27. In the defendant CHRIS MESSALAS's consensually recorded conversations with the CW, MESSALAS discussed, inter alia, the scheme to manipulate the price of BioCube stock and the CW's prospective purchase of BioCube shares, and admitted to drafting and filing the Schedule 13G signed by Co-Conspirator 1 relating to the ownership of BioCube stock by Admetus Capital. For example, on or about October 22, 2015, the CW consensually recorded a telephone call with the defendant CHRIS MESSALAS in which..inter alia. MESSALAS and the CW discussed the possibility of MESSALAS's transferring BioCube shares to the CW via a matched trade. In or about November 2015, rather than carrying out a matched trade, the CW and MESSALAS agreed that MESSALAS would instead sell BioCube shares to the CW through a private sale. 28. On or about December 1, 2015, the CW consensually recorded his meeting with the defendant CHRIS MESSALAS. Prior to the meeting, federal law enforcement agents provided the CW with a bank check in the amount of $25,000, made out to Blackwater. At the meeting, the CW provided that bank check to MESSALAS. During the course of the meeting, MESSALAS and the CW discussed the scheme to manipulate the price of BioCube stock. MESSALAS deposited the bank check into a Blackwater Capital Markets Limited bank account the same day. 10

11 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 11 of 28 PageID #: 234 B. The Defendant CHRIS MESSALAS's Calls with Co-Conspirators 29. On or about and between October 17, 2016 and February 23, 2017, federal law enforcement agents conducted a judicially authorized wiretap of the defendant CHRIS MESSALAS's cellular telephone. During several calls intercepted pursuant to the wiretap, MESSALAS discussed with co-conspirators the scheme to manipulate the price and trading of BioCube stock. 30. For example, on or about February 7,2017, the defendant CHRIS MESSALAS called Co-Conspirator 1 and they discussed, among other things, having Co- Conspirator 1 call a broker-dealer ("Broker 1"), an individual whose identity is known to the Grand Jury. After MESSALAS stated that Co-Conspirator 1 should call Broker 1, MESSALAS (referred to below as "CM") and Co-Conspirator 1 (referred to below as "CCl") had the following exchange: CCl: Now, let me ask you this question. He, does, he knows you're involved with BioCube, not Admetus, right or, you know, yes or no? CM: I didn't tell him. I told him you're one of my friends, you run Admetus, ok, and I told him CC1: Did you tell him what the stock was? Did you tell him it was BioCube CM: Yes, yes, but he was in his house. He knows the stock! He did the 15c [i.e.. SEC Rule 15c2-l 1 documentation]. He told me, "Chris, as long" CCl: But he knows you're involved in BioCube? CM: He doesn't know to what extent, just don't, don't CCl: Look, I'm just asking. Ok? I'm not gonna say anything. I need to know what to say and what not to say, Chris, so just be a little patient, because I never know with you. I don't know, so I, you have to understand. I just want to make sure 11

12 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 12 of 28 PageID #: 235 I don't say anything that I shouldn't say, or I do say certain things that I want to say... Do I tell him when I open Admetus, the only thing I'm depositing at this point is BioCube? CM: Yeah, but you're gonna do more stuff, you know, "Chris tells me you're a great" which he is, he knows how to trade. CC1: That's what I want to say, yeah, give me a script, "Chris says you know your act, you know your, you know your stuff and you've done a hundred million of these things and basically the first one, the first uh entity I'm getting in here is BioCube." CM: Right, and "Chris told me to use you " 31. In the same call, Co-Conspirator 1 asked the defendant CHRIS MESSALAS what to say to Broker 1 regarding the last name of a relative of MESSALAS (the "Relative"), an individual whose identity is known to the Grand Jury. MESSALAS and Co- Conspirator 1 had the following exchange: CCl: If he happens to ask, or anybody in the future in compliance with that company happens to ask what's my relationship with [the last name of Ae Relative] or whatever, can I just say CM: No, she's just a silent partner, which is the truth by the way. CCl: Well a silent partner. You know they own half the flickin' thing, so, you know, just give me something that's believable. That she was a client of mine? CM: Yeah, yeah you could say that. CCl: Any other ideas? CM: No, I mean listen, I don't have to hide much from [Broker 1], he knows me a long time ^I'm worried about his compliance, absolutely CCl: I want to be ^right, and I want to be consistent, that's all. Um, so if that comes up, what's the best answer? 12

13 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 13 of 28 PageID #: 236 CM: Just say, I mean, maybe "it's a client," okay? Or something like that. CCl: Or a business associate. Um. [Sighs] All right, all right. CM: Don't worry, dude. He's good. You'll see. CC1: All right, give me his number. 32. In a subsequent text message sent on or about the same day, the defendant CHRIS MESSALAS sent Co-Conspirator 1 a telephone number for Broker 1. V. The Scheme to Launder Proceeds of the BioCube Stock Fraud 33. In or about and between October 2015 and April 2017, the defendants CHRIS MESSALAS, DIMITRIOS ARGYROS and ANDREAS KARASAMANIS, together with others, engaged in a scheme to launder approximately $2 million in proceeds of the BioCube stock manipulation scheme through offshore nominee accounts. Pursuant to the scheme, MESSALAS, ARGYROS and KARASAMANIS agreed that the CW would pay MESSALAS to purchase BioCube shares, the shares would get transferred to an offshore nominee account set up by KARASAMANIS, and the transactions would be papered to conceal the CW's ownership of the shares. In addition, on or about February 25,2016, KARASAMANIS facilitated the wire transfer of approximately $24,965 from an overseas bank account to MESSALAS's U.S. bank account with the intent to promote the carrying on of the BioCube stock pump and dump scheme. 34. In or about October 2015, the defendant CHRIS MESSALAS told the CW that MESSALAS's "cousin" - whom the CW later understood to be the defendant DIMITRIOS ARGYROS - could assist with setting up offshore accounts. MESSALAS ultimately put the CW in contact with the defendant ANDREAS KARASAMANIS in order to help the CW begin 13

14 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 14 of 28 PageID #: 237 the process of setting up an offshore account. MESSALAS provided the CW with a telephone number for KARASAMANIS. 35. In approximately the fall of 2015, the CW began meeting and speaking with the defendants DIMITRIOS ARGYROS and ANDREAS KARASAMANIS, and consensually recorded their conversations, all at the direction of federal law enforcement agents. For example, on or about November 10, 2015, the CW called KARASAMANIS to discuss setting up the offshore account. During that call, ICARASAMANIS expressed his unwillingness to discuss the matter over the phone and his preference for meeting in person. 36. On or about November 17,2015, the CW consensually recorded his meeting with the defendant DIMITRIOS ARGYROS. During the meeting, in addition to discussing the BioCube pump and dump scheme, ARGYROS told the CW that he had spoken to the defendant CHRIS MESSALAS about the CW and explained that the defendant ANDREAS KARASAMANIS could open bank and brokerage accounts outside of the United States, specifically in Cyprus, which would conceal the CW's identity. 37. On or about November 19, 2015, the defendant ANDREAS KARASAMANIS sent the CW an with the subject line "Business Development Services," providing the appearance of legitimacy to his participation in the money laundering scheme. KARASAMANIS wrote, in pertinent part, that it "has been a pleasure to discuss with you the possibility to help you with Marketing & Business Development services in Europe as well as in the Middle East Region." KARASAMANIS proposed that he and the CW "meet up in NY, which I think is more suitable so Jimmy fi.e.. the defendant DIMITRIOS ARGYROS] can also join our meetings." The CW responded in an the next day and suggested that he and KARASAMANIS meet in New York in early January 2016, and wrote that KARASAMANIS 14

15 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 15 of 28 PageID #: 238 could send him the invoice. On or about November 23,2015, KARASAMANIS ed the CW and attached an "invoice" from "Stelx Management Services," billing the CW $5,000 for "Advance Payment for Business Development Services." 38. On or about January 11, 2016 and January 13,2016, the CW consensually recorded his meetings with the defendant ANDREAS KARASAMANIS in New York, New York. At the January 13, 2016 meeting, KARASAMANIS indicated that he already had had conversations with the defendants CHRIS MESSALAS and DIMITRIOS ARGYROS relating to the money laundering scheme. Also during the meeting, the CW discussed with KARASAMANIS the fact that MESSALAS's scheme to promote BioCube stock would be the source of the funds the CW would launder into one or more offshore accounts set up by KARASAMANIS. 39. On or about January 20, 2016, the CW consensually recorded his meeting with the defendant CHRIS MESSALAS. MESSALAS and the CW discussed purchasing additional BioCube stock to be deposited in offshore accounts through the defendant ANDREAS KARASAMANIS. 40. On or about February 5, 2016, the CW consensually recorded a telephone call with the defendant ANDREAS KARASAMANIS. During the call, KARASAMANIS stated that everyone had agreed that he would receive 30 percent of the CW's profits in the pump and dump scheme as a fee for his participation in the money laundering scheme. 41. On or about February 9, 2016, the CW consensually recorded his text message conversation with the defendant ANDREAS KARASAMANIS. KARASAMANIS sent two text messages to the CW in quick succession stating, respectively: "AGITE FAMILY OFFICE LTD" and "Awaiting from you the details as discussed to issue the invoice." Shortly 15

16 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 16 of 28 PageID #: 239 thereafter, the CW provided billing information to KARASAMANIS that KARASAMANIS then used to create a new $30,000 invoice. KARASAMANIS ed the invoice to an account controlled by federal law enforcement agents (which the CW had provided to KARASAMANIS) on or about February 16, On or about February 18,2016, federal law enforcement agents wired $30,000 from an undercover account at a financial institution located in the Eastern District of New York, registered to an entity whose name the CW had discussed previously with the defendant ANDREAS KARASAMANIS, to an offshore account identified by KARASAMANIS. $5,000 of that amount was a fee for KARASAMANIS, and the remaining $25,000 was to be used by KARASAMANIS - after moving it from his bank account to an "Agite" corporate account in Dubai, United Arab Emirates to purchase from the defendant CHRIS MESSALAS additional BioCube shares on behalf of the CW. On or about February 25, 2016, $24,965 was wired from a Mashreq Bank account in Dubai in the name of "Agite Ltd Offshore," located at A1 Jazeera Big, A1 Man Area, Ras A1 Khaimah Free Zone, PO Box 31291," to a Citibank account of Blackwater Capital Markets Limited at "20 Carlton PI" in Staten Island, New York, United States. The notation for the transaction was "PURCHASE OF SHARES AS PER AGREEMENTFEBRUARY [sic] 9TH 2015." 43. On or about June 28,2016, the CW consensually recorded a meeting with the defendant DIMITRIOS ARGYROS. During the meeting, ARGYROS and the CW again discussed the BioCube pump and dump scheme and that it was the source of the funds to be laundered. Specifically, the CW stated that the defendant CHRIS MESSALAS "is going to do what Chris does, right? He's going to move the stock to $0.50, to $1.00 He's going to do his promotion, his pump, whatever you want to call it. He's going to get the stock going. And then 16

17 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 17 of 28 PageID #: 240 we need to liquidate." ARGYROS thereafter told the CW, in sum and substance and in part, that the defendant ANDREAS KARASAMANIS was in the process of opening the offshore accounts, including an account in Cyprus, and that KARASAMANIS needed another week to finish. ARGYROS said that "Agite" was the name of the relevant offshore company, that he was speaking with BCARASAMANIS every day, and "pushed him, too," to set up the accounts, telling KARASAMANIS, '"you have to move.'" During the same meeting, the CW discussed with ARGYROS the anticipated $2 million in proceeds from the sale of the CW's BioCube shares after the completion of the fi-audulent pump of BioCube stock. The CW told ARGYROS that KARASAMANIS was to receive a 30 percent share of such proceeds, explaining that KARASAMANIS "is going to make 30 percent of whatever, right. So if you have two million shares, let's just say Chris [MESS ALAS] is going to do his promotion to a dollar, he [KARASAMANIS] is going to make $600,000." 44. On or about July 22, 2016, the CW consensually recorded a conference call with the defendants DIMITRIOS ARGYROS and ANDREAS KARASAMANIS. During the call, KARASAMANIS confirmed that, pursuant to the scheme, two offshore nominee accounts had been opened in the name of a "so-called investor" or nominee named Andrikos. KARASAMANIS explained that one of the accounts was in Limassol, Cyprus and one was in the Bahamas. 45. During their ensuing consensually recorded conversations with the CW in or about and between July 2016 and March 2017, the defendants ANDREAS KARASAMANIS and DIMITRIOS ARGYROS demonstrated their eagerness to continue with the money laundering scheme. 17

18 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 18 of 28 PageID #: 241 COUNT ONE (Conspiracy to Commit Securities Fraud) 46. The allegations contained in paragraphs one through 45 are realleged and incorporated as though fully set forth in this paragraph. 47. In or about and between October 2015 and April 2017, both dates being approximate and inclusive, within the Eastern District of New York and elsewhere, the defendants CHRIS MESSALAS and BORIS RUBIZHEVSKY, together with others, did knowingly and willfully conspire to use and employ manipulative and deceptive devices and contrivances, contrary to Rule lob-5 of the Rules and Regulations of the United States Securities and Exchange Commission, Title 17, Code of Federal Regulations, Section b-5, by: (a) employing devices, schemes and artifices to defraud; (b) making untrue statements of material fact and omitting to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and (c) engaging in acts, practices and courses of business which would and did operate as a fraud and deceit upon investors and potential investors in BioCube, in connection with the purchase and sale of securities of BioCube, directly and indirectly, by use of means and instrumentalities of interstate commerce and the mails, contrary to Title 15, United States Code, Sections 78j(b) and 78ff. 48. In furtherance of the conspiracy and to effect its objects, within the Eastern District of New York and elsewhere, the defendants CHRIS MESSALAS and BORIS RUBIZHEVSKY, together with others, committed and caused to be committed, among others, the following: 18

19 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 19 of 28 PageID #: 242 OVERT ACTS (a) On or about October 9,2015, MESSALAS sent an from the address with the subject line "BIOCUBE 13G WORD" to an employee of SEC Compliance Incorporated, and stating: "here is document in word." Attached to that was a Schedule 13G on behalf of Admetus Capital and signed electronically by Co- Conspirator 1. (b) On or about October 13, 2015, in response to an from an employee of SEC Compliance Incorporated (the "Filing Agent"), an individual whose identity is known to the Grand Jury, asking MESSALAS to "review the draft version 2 and provide us your approval to file," MESSALAS responded in an to the Filing Agent and stated, "good to file." The Schedule 13G approved by MESSALAS, which was filed with the SEC on or about October 14,2015, stated that Admetus Capital was the owner of 5,250,000 shares of BioCube and did not disclose MESSALAS's control over any of those shares. (c) On or about November 27,2015, MESSALAS sent the CW an with the subject line, "this is agreement take a look," attaching a document entitled "stock purchase bicb []." The document, entitled "Securities Purchase Agreement," was dated "December 01,2015" and stated that it was between "Blackwater Capital Markets Limited (The * Seller')" and a "Purchaser" with the name left blank. The agreement stated, in pertinent part, that "[t]he number of Shares will be 850,000 (eight Hundred and fifty)" and "[t]he total Purchase Price will be $25,000 (Twenty five thousand US dollars)." (d) On or about December 1, 2015, MESSALAS met with the CW and obtained a bank check in the amount of $25,000, made out to Blackwater. During the course of the meeting, MESSALAS and the CW discussed the BioCube pump and dump scheme. 19

20 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 20 of 28 PageID #: 243 (e) On or about December 1,2015, MESS ALAS deposited the $25,000 bank check he had received from the CW into a Blackwater Capital Markets Limited bank account at Citibank. (f) On or about April 11,2016, RUBIZHEVSKY forwarded to MESS ALAS an he had sent on or about December 10,2014 to Co-Conspirator 1 with the subject "Re:[Co-Conspirator 1] CONSULTING AGREEMENT," and in which he had stated to Co-Conspirator 1: "Executed $30K note attached." Attached to the was a document entitled "Secured Convertible Promissory Note," dated June 30,2014, which stated, in pertinent part: "For value received, BioCube, Inc. (the"company")... hereby promises to pay to the order of [Co-Conspirator 1],... the principal amount of [$30,000]..." The document also stated, in pertinent part, that Co-Conspirator 1 "shall have the right... to convert any Conversion Amount, at the election of [Co-Conspirator 1]..., into frilly paid and non assessable shares of Common Stock as such stock exists on the date of issuance of this Note... at the conversion price [of]... $0,008." The document was signed for BioCube by RUBIZHEVSKY, in his capacity as BioCube's Chief Executive Officer. (g) On or about June 27,2016, Co-Conspirator 1 forwarded to MESS ALAS an a broker-dealer ("Broker 2"), an individual whose identity is known to the Grand Jury, had sent to Co-Conspirator 1 earlier that day. In that , which had the subject "BICB Deposit" and was addressed to Co-Conspirator 1, Broker 2 stated, in pertinent part: We are rejecting your deposit of BICB and closing your account with [Brokerage Firm 1, an entity whose identity is known to the Grand Jury]. In September of last year, we inquired about the relationship of Christopher Messalas to Admetus Capital. At that time you indicated that there was no relationship aside from the fact that he was married to the beneficiary of [Relative's last name] Family Trust. 20

21 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 21 of 28 PageID #: 244 In the deposit documentation provided, the legal opinion states that Christopher Messalas was CC'd for the opinion at his address of The fact that your attorney is corresponding with Christopher Messalas regarding deposits, at an address hosted by Admetus Capital no less, clearly shows that you misrepresented his involvement with Admetus Capital. For that reason, we will be closing the account and returning any shares remaining in the account. (h) Later on or about June 27,2016, MESSALAS sent Co-Conspirator 1 an in which he stated: Mr messalas has over 25 years in the securities industry and only assists in preparing documentation because of his knolage [sic] of the industry..! run a large legal firm and have a robust schedule any help I can receive is greatly appreciated. Mr Messalas has no part in the ownership or management of admetus capital he is purely there in a clerical capacity to prepare documentation for various contractors..yes I had answered your question truthfully and find it quite troubling that you would accuse me of anything but that..as for his address do you have a [Brokerage Firm 1] address? Do you own [Brokerage Firm 1]? why can't a person have a company and not own the company? I find it quite troubling that you would take this type of action without at least speaking to me personally and addressing your concerns. I hope we can rectify this immediately and get back to doing what we do best. (i) On or about October 25,2016, MESSALAS called RUBIZHEVSKY, who asked MESSALAS: "Well aren't you filing today or tomorrow for BioCube?" MESSALAS replied: "Yes, that's what I'm saying, so I gotta get this fuckin' done... Dude, I'm sitting with 27,000 with one guy, ok, another 400,000 shares. If I can get him out of that fuckin' stock dude that's like 50 grand we'll be able to play with." RUBIZHEVSKY responded: "Ah man, so fuckin' desperate." 21

22 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 22 of 28 PageID #: 245 (j) On or about November 23, 2016, MESSALAS called the Relative, who asked MESSALAS: "Well what about BioCube?" MESSALAS responded: "I get every day fuckin' 42 calls about BioCube The call I got today was very interesting." The Relative then asked: "When can I start looking at houses?" MESSALAS responded: "Put it this way: I really think in all seriousness, and I'm not even talking about JUT, ok, I think BioCube is a quarter easy." The Relative later stated: "A quarter's not gonna get me a house." MESSALAS then responded, lowering his voice: "Yeah I know but I got millions of shares there, I'm gonna put another million right now in uh, what do ya call it, and I'm gonna, I'll give you some more, I gotta do some conversions." (k) On or about December 27,2016, MESSALAS called RUBIZHEVSKY and stated, in pertinent part: "you know that fifty thousand dollar note that you have on [Co-Conspirator 1]? I need to make one for, what was the money he sent? Eleven thousand six sixty six?" RUBIZHEVSKY replied: "uh yeah, something like that." MESSALAS also stated that the note needed to be the "[s]ame fucking date," and explained: "You gotta do it the same date as the fucking, uh, as the wire, like a couple days before. It doesn't matter, I mean we bought the note anyway..." RUBIZHEVSKY later stated that he would draft a letter stating: "Mr. [Co-Conspirator I], thank you for the, uh, the first payment of the 50,000 This letter acknowledges the receipt of such and, uh, please be reminded you have so much left and, uh, thank you for the next payment." (1) On or about January 30, 2017, RUBIZHEVSKY called MESSALAS and MESSALAS referred to pumping the price of a stock. RUBIZHEVSKY later stated: "Well, I'm hoping that you'll do the same, you know, with our stock so we can get something out of it, too," to which MESSALAS responded: "No, I'm going to watch it, no. 22

23 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 23 of 28 PageID #: 246 believe me... after which RUBIZHEVSKY laughed and said "Ok." RUBIZHEVSKY also stated: "I know you'll take good care of us," to which MESSALAS responded: "No, I'm not I'm going to fuck you. Ok, so just in your mind, what do you call it, the same way I'm going to fuck you, you can fuck me. Those shares aren't in my name and I ain't going to disclose until it's fucking done. If you disclose it now they're going to go crazy." (Title 18, United States Code, Sections 371 and 3551 et seq.i COUNT TWO (Conspiracy to Commit Money Laundering) 49. The allegations contained in paragraphs one through 45 are realleged and incorporated as though fully set forth in this paragraph. 50. In or about and between October 2015 and April 2017, both dates being approximate and inclusive, within the Eastern District of New York and elsewhere, the defendants CHRIS MESSALAS, DIMITRIOS ARGYROS, also known as "Jimmy," and ANDREAS KARASAMANIS, together with others, did knowingly and willfully conspire: (a) to transport, transmit and transfer a monetary instrument and funds from a place in the United States to and through a place outside the United States and to a place in the United States from and through a place outside the United States, (i) with the intent to promote the carrying on of specified unlawful activities, contrary to Title 18, United States Code, Section 1956(a)(2)(A); (ii) to conceal and disguise the nature, location, source, ownership and control of the proceeds of the specified unlawful activities, contrary to Title 18, United States Code, Section 1956(a)(2)(B)(i); and (iii) to avoid a transaction reporting requirement under state and federal law, contrary to Title 18, United States Code, Section 1956(a)(2)(B)(ii); and 23

24 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 24 of 28 PageID #: 247 (b) to conduct financial transactions affecting interstate and foreign commerce, specifically the intemational wire transfer of money and securities, which transactions involved property represented by a person at the direction of, and with the approval of, a federal official authorized to investigate violations of Title 18, United States Code, Section 1956, to be the proceeds of specified unlawful activity, specifically, fraud in the sale of securities, contrary to Title 15, United States Code, Sections 78j(b) and 78ff, (i) with the intent to promote the carrying on of such specified unlawful activities, contrary to Title 18, United States Code, Section 1956(a)(3)(A); (ii) to conceal and disguise the nature, location, source, ownership and control of property believed to be the proceeds of the specified unlawful activities, contrary to Title 18, United States Code, Section 1956(a)(3)(B); and (iii) to avoid a transaction reporting requirement under state and federal law, contrary to Title 18, United States Code, Section 1956(a)(3)(C). (Title 18, United States Code, Sections 1956(h) and 3551 M seq.l COUNT THREE (Money Laundering) 51. The allegations contained in paragraphs one through 45 are realleged and incorporated as though fully set forth in this paragraph. 52. In or about February 2016, within the Eastern District of New York and elsewhere, the defendant ANDREAS KARASAMANIS, together with others, did knowingly and intentionally transport, transmit and transfer monetary instruments and funds to a place in the United States from and through a place outside the United States with the intent to promote the carrying on of specified unlawful activity, specifically, fraud in the sale of securities. (Title 18, United States Code, Sections 1956(a)(2)(A), 2 and 3551 ^ seq.l 24

25 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 25 of 28 PageID #: 248 CRIMINAL FORFEITURE ALLEGATION AS TO COUNT ONE 53. The United States hereby gives notice to the defendants charged in Count One that, upon their conviction of such offense, the government will seek forfeiture, in accordance with Title 18, United States Code, Section 981(a)(1)(C) and Title 28, United States Code, Section 2461(c), which require any person convicted of such offense to forfeit any property, real or personal, constituting, or derived from, proceeds obtained directly or indirectly as a result of such offense. 54. If any of the above-described forfeitable property, as a result of any act or omission of the defendants: (a) (b) (c) (d) (e) carmot be located upon the exercise of due diligence; has been transferred or sold to, or deposited with, a third party; has been placed beyond the jurisdiction of the court; has been substantially diminished in value; or has been commingled with other property which cannot be divided without difficulty; it is the intent of the United States, pursuant to Title 21, United States Code, Section 853(p), to seek forfeiture of any other property of the defendants up to the value of the forfeitable property described in this forfeiture allegation. (Title 18, United States Code, Section 981(a)(1)(C); Title 21, United States Code, Section 853(p); Title 28, United States Code, Section 2461(c)) 25

26 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 26 of 28 PageID #: 249 CRIMINAL FORFEITURE ALLEGATION AS TO COUNTS TWO AND THREE 55. The United States hereby gives notice to the defendants that, upon their conviction of the offense charged in Count Two, and/or, in the case of the defendant ANDREAS KARASAMANIS, Count Three, the government will seek forfeiture, in accordance with Title 18, United States Code, Section 982(a)(1), which requires any person convicted of such offenses to forfeit any property, real or personal, involved in such offenses, or any property traceable to such property. 56. If any of the above-described forfeitable property, as a result of any act or omission of the defendants: (a) (b) (c) (d) (e) cannot be located upon the exercise of due diligence; has been transferred or sold to, or deposited with, a third party; has been placed beyond the jurisdiction of the court; has been substantially diminished in value; or has been commingled with other property which cannot be divided without difficulty; it is the intent of the United States, pursuant to Title 21, United States Code, Section 853(p), as incorporated by Title 18, United States Code, Section 982(b)(1), to seek forfeiture of any other 26

27 ^ r Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 27 of 28 PageID #: 250 property of the defendants up to the value of the forfeitable property described in this forfeiture allegation. (Title 18, United States Code, Sections 982(a)(1) and 982(b)(1); Title 21, United States Code, Section 853(p)) A TRUE BILL OREPERSON BRIDGET M.ROHDE ACTING UNITED STATES ATTORNEY EASTERN DISTRICT OF NEW YORK 27

28 Case 1:17-cr RRM Document 76 Filed 09/20/17 Page 28 of 28 PageID #: 251 F.#2014R01614 FORM DBD-34 JUN.85 No. UNITED STATES DISTRICT COURT EASTERN District of NEW YORK CRIMINAL DIVISION THE UNITED STATES OF AMERICA VJ. CHRISMESSALAS, BORISRUBIZHEVSKY, DIMITRIOS ARGYROS, also known as "Jimmy, " and ANDREAS KARASAMANIS, Defendants. SUPERSEDING INDICTMENT (T. 18, U.S.C., 371, 981(a)(1)(C), 982(a)(1), 982(b)(1), 1956(a)(2)(A), 1956(h), 2 and 3551 et seq.; T. 21, U.S.C., 853(p); T. 28, U.S.C., 2461(c).) A true bill. Filed in open court this day. of A.D.20 Clerk Balk $ Alicyn Cooley, Tyler Smith and Kaitlin Farrell, Assistant U.S. Attorneys (718) /6186/6072