Florida billionaire Phillip Frost accused by SEC in fraud ploy of $ 27 million

Miami billionaire Phillip Frost is one of 10 people on Friday accused by the Securities and Exchange Commission of participating in a fraud ploy that generated more than $ 27 million.

The SEC alleges that from 2013 to 2018, Frost – who founded the pharmaceutical company OPKO Health and is a major beneficiary of the Phillip and Patricia Frost Museum in Miami – and nine other investors manipulated the stock prices of three companies for their own account. The SEC did not share the names of the three companies.

Investors would promote companies without revealing that they had a stake, waiting for their prices to rise, and then selling their shares. Retail investors, meanwhile, "ended up with virtually worthless stock," according to the SEC's statement.

"[The group charged] engaged in frenzied market manipulation that has advanced their financial interests while fleeing innocent investors and compromising the integrity of our securities markets, "said Sanjay Wadhwa, senior associate director of the SEC's Division of Enforcement . "However, they did not appreciate the SEC's determination to continue and relentlessly punish participants in microcap fraud schemes."

OPKO Health and Frost are both named in the lawsuit, although the SEC only estimates that Frost participated in two of the three programs and earned about $ 1.1 million. The long-time health care investor would have a net worth of $ 2.6 billion, according to Forbes.

Frost's pharmaceutical company said in a statement that the SEC had not informed them of their intention to file a complaint and said the complaint contained "serious factual inaccuracies".

"If the SEC had followed its own standard procedures, OPKO and Dr. Frost would gladly have provided information that would have answered a number of apparent SEC issues, and the filing of this claim against them could have been avoided", indicated the company. "OPKO and Dr. Frost have always been pleased to adhere to the highest standards of financial disclosure, and are confident that once an appropriate investigation has been completed and the facts fully disclosed, question will be resolved favorably. "

The scheme is believed to have been led by South Florida businessman Barry Honig, a major shareholder of Riot Blockchain Inc., a cryptocurrency company whose stock rose 24.3%. after the news. Riot Blockchain, in which Honig is heavily invested, was cited in April as part of a formal SEC investigation, reported CNBC earlier this year.

"Honig was the main strategist, calling other defendants to buy or sell shares, to arrange the issuance of shares, to negotiate transactions or to engage in promotional activities," he said. declared the complaint of the SEC.

Honig, who would have earned more than $ 3.4 million through the system, could not be reached for comment.