The US District Court for the District of Massachusetts entered final judgments against California resident Kevin C. Dills and two entities controlled by Dills.
The Securities and Exchange Commission (SEC) indicted Dills and Joseph Padilla in June 2023 for their roles in a fraudulent stock-selling scheme.
According to the complaint, Padilla engaged in a fraudulent scheme for his own benefit as well as on behalf of individuals who paid Padilla to arrange illegal stock sales.
The complaint alleges that these individuals hid their identities by selling shares through offshore accounts in different names arranged by Padilla.
From early 2020 to 2022, Dills allegedly conspired with Padilla to sell stock in Oncology Pharma, Inc., a company Dills secretly controlled, avoiding legal requirements for a control person to sell stock to the public . According to the complaint, Dills acquired and sold shares of Oncology Pharma through two other entities he controlled, Bright Star International, Inc. and Life Sciences Journeys, Inc.
Dills allegedly transferred stock to individuals connected to Padilla and then allegedly received proceeds from illegal stock sales by Padilla. During this time, Dills allegedly used his influence with Oncology Pharma to issue press releases intended to make its stock more attractive to investors.
The complaint alleged that Dills, by splitting ownership of Oncology Pharma into two front companies, transferring stock to Padilla and then sharing the proceeds of Padilla’s illegal sales, willfully violated the registration requirements of the federal Securities Act.
Dills has consented to a final judgment conclusively charging him with violating Sections 5 and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
The judgment imposes a penny stock bar and additional injunctive relief and orders Dills to pay a fine of $223,229.
The judgment further orders Dills to pay $6,225,448 in restitution and $786,645 in prejudgment interest jointly with Bright Star International and Life Sciences Journeys.
The court also entered final consent judgments against defendants Bright Star International and Life Sciences Journeys, ordering them to pay $6,920,345 and $91,747, respectively, in disgorgement and prejudgment interest jointly and severally with Dills.
The rulings provide that the disgorgement may be offset by a dollar amount that Dills has separately agreed to pay to the U.S. Attorney for the District of Massachusetts in a plea agreement to resolve a related criminal action. If the court in the criminal action does not accept Dill’s plea agreement, then Dills would owe the Commission full disgorgement.