Christopher Esposito was sentenced in his Cannabiz Mobile fraud case.
Green Market Report first reported the case against Esposito and Cannabiz Mobile when the Massachusetts resident was charged with selling 1.3 million shares of fraudulently obtained stock in Cannabiz Mobile Inc. He failed to register it with the U.S. Securities Exchange Commission, according to a press release from the Massachusetts U.S. Attorney’s office.
Esposito and his partner, Anthony Jay Pignatello, used “backdated promissory notes to fraudulently obtain free-trading shares in the company,” according to the release. The pair also installed a straw man puppet as president and CEO of the company, but “in reality, the executive reported to Esposito.”
In total, between September 2014 and February 2015, Esposito personally sold more than 1.3 million shares fraudulently obtained as part of the scheme.
The United States Attorney’s Office in Massachusetts reported that U.S. District Judge Patti B. Saris on Tuesday also ordered Esposito to forfeit $20,294 and pay $61,693 in restitution to investors who lost money in a separate purported business venture that he pitched involving the company Code2Action Inc.
Between August 2019 and February 2020, Esposito represented to investors that he would take Code2Action public via a reverse merger, and he solicited investments in the company for that purpose. The reverse merger, however, never took place.
Law360 wrote that Esposito had sought three years of probation and that the government recommended 15 months in prison plus three years of supervised release. Instead, he will spend five years on probation, including three months in a halfway house.
Pignatello pled guilty in March 2021 to one count of conspiracy to commit securities fraud for his role and is set to be sentenced on Dec. 12 before U.S. District Court Judge George A. O’Toole Jr.