Woburn Man Charged in Stock Manipulation Scheme

A stock promoter from Woburn appeared in Boston District Court on Monday on charges of security fraud in connection with his alleged participation in a scheme to manipulate the market for the publicly traded stock of a microcap company.

Louis Buonocore, 60, was charged with conspiracy and securities fraud based on his involvement in the manipulation of the stock of YaFarm Technologies, Inc. (YaFarm), a penny stock company that claimed to be entering the stem cell therapy business.

In a parallel action, the Securities and Exchange Commission (SEC) announced securities fraud charges against Buonocore and another individual, Frank Morelli, in connection with the scheme.

According to court documents, in late 2012, Buonocore and his co-conspirators secretly acquired majority control of YaFarm’s free-trading shares, using nominees to conceal their ownership from the SEC and others. In early 2013, with millions of shares at their disposal, Buonocore and his co-conspirators launched a misleading promotional campaign to persuade investors that YaFarm was acquiring a successful stem cell therapy business and the new laboratory it was building in Cancun, Mexico.

In reality, YaFarm had no meaningful operations, the institution being acquired was still in development, and it lacked the funds needed to build the laboratory. As a result of the hype created by the misleading press releases, Buonocore and his co-conspirators were able to sell their YaFarm stock to unwitting investors at artificially high prices.

The charges arise out of a multi-year investigation focusing on preventing fraud in the microcap stock markets. Microcap companies are small publicly traded companies whose stock often trades at pennies per share.

The charge of securities fraud provides a sentence of no greater than 20 years in prison, three years of supervised release, and a fine of $5 million. The conspiracy charge provides a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000, or twice the gross loss to the victim.

The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.