An ode to Harmel S. Rayat
Because the potential payoffs are much greater than the penalties
I am taking a brief respite here from the flood of earnings releases (all the crappy companies tend to wait until the deadline to announce) to pay a brief tribute to Harmel S. Rayat, Vancouver-based stock promoter extraordinaire.
(The SEC has a feature on their website that lets you sign up for updates on various matters before the SEC, from simple news releases to enforcement actions and litigation releases. It’s really quite good, and I recommend it if that’s your kind of thing.)
https://public.govdelivery.com/accounts/USSEC/subscriber/new?preferences=true#tab1
On Tuesday the 27th I received an email from the SEC saying that after a 5-year long pursuit their litigation against Harmel S. Rayat was concluded regarding the matter of RenovaCare and the subsequent fraud case that it spawned. Here’s the release.
https://www.sec.gov/litigation/litreleases/lr-25945
Back in 2017-2018 shares of RenovaCare (RCAR) went on something of a wild ride, going from pennies to north of $20 a share if memory serves me. I put out a brief blurb on the name at the time.
https://martinsvanda.substack.com/p/renovacare-inc-rcar
His penalty for running a “pump and dump” scheme (the SEC’s words, not mine) and propelling shares of RenovaCare, owner of the amazing “SkinGun” technology, from pennies a share to a market cap approaching $1 Billion dollars? Disgorgement of $1.27M, civil penalty of $1.27M, and interest of $207k. His lone remaining co-defendant, Jatinder Bhogal, was hit for about $2M. And that’s it. No jail, no nothing else. Just don’t hang around any other public companies and promise that you won’t do it again, please.
Litigation against a couple of other defendants, Singh Sidhu and Sharon Fleming, had concluded last year with similar results.
https://www.sec.gov/litigation/litreleases/lr-25883
To see how brazen some folks are, check out the names of some of the entities they set up as part of their pump and dump effort. “Treadstone Financial.” “Blackbriar Asset Management.” Anyone else out there ever see the Jason Bourne movies? These names ring any bells?
https://www.sec.gov/files/litigation/litreleases/2024/judg25945-rayat.pdf
Now, I happen to be of the belief that stock promoters, fraudsters, and pump and dump specialists don’t necessarily like playing by the rules the rest of us endure and likely have alternative avenues for disposing of their shares. Call me crazy, but as their nefarious plans play out and their chosen stock is spiking to ridiculous highs, I can’t see them filing the appropriate forms with the SEC, patiently waiting for approval, and then waiting their turn to orderly dispose of their shares on the market at the pre-approved level and pace set out by insider trading rules. Call me a conspiracy theorist, but I just don’t see that happening. So when the SEC asks for a “disgorgement” of gains, I just have a hard time believing that all of these folks combined were only able to sell a tiny fraction of the number of shares that they actually owned. I just don’t buy it.
Now, what makes Harmel S. Rayat so special, of course, is that this wasn’t his first brush with the SEC’s enforcement apparatus. That particular incident goes back to his days running a Vancouver stock promotion website called EquityAlert.com and goes back to 2000.
https://www.sec.gov/litigation/admin/33-8306
Once again, after running a couple of pumps and dumps into the stratosphere, what was his penalty? $20,000.
https://www.sec.gov/litigation/litreleases/lr-16662
Now there’s a return on our taxpayer dollars, folks.
Then, of course, there was SolarWindow Technologies (WNDW), a company that first crossed my screens back during the time of the “Great Financial Crisis” in 2007. Their main product turned out to be selling shares of stock, rather than the technology of transforming ordinary window glass into cash-and-energy-generating solar panels. I put out several notes on these folks, with the most recent being in 2022 when Harmel S. Rayat sold his controlling stake in the company in a really convoluted mess of a transaction.
https://martinsvanda.substack.com/p/solarwindow-technologies-wndw
As long as “disgorgement” and “civil penalties” and “interest” are the only 3 things a potential stock fraudster has to worry about, cases like this will continue being commonplace. Until the DOJ decides to get involved and actually seeks jail time, asking those responsible to please refrain from defrauding the rest of us is about all we can ever hope to see.
As an addendum, former Ontrak (OTRK) CEO Terren Peizer is due in court next Monday from charges filed by the DOJ.
https://www.justice.gov/criminal/criminal-vns/case/united-states-v-terren-s-peizer
I hope I’m not giving the DOJ too much credit here.