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by Mike Caswell

A federal judge in Boston has permanently banned Joseph Padilla, the California man jailed for an OTC Markets scheme that he ran through a Canadian brokerage. The SEC said that Mr. Padilla helped insiders secretly unload millions of shares on the markets, in one case facilitating the illegal sale of over $100-million worth of stock amidst a paid promotion. (All figures are in U.S. dollars.) His "multifaceted fraudulent scheme" ran for over two years and came despite a prior three-year ban that he agreed to in 2012.

The ban for Mr. Padilla is contained in an order handed down on Tuesday, Jan. 21, in federal court in Boston. In addition to the permanent penny stock ban, the judge has entered an injunction barring future violations. The brief order contains few details, simply describing Mr. Padilla's fraud in uncomplimentary legal terms such as "egregious," involving a "high degree of scienter" and "likely to recur absent a permanent ban."

While the judge had little to say on Tuesday, the SEC previously set out what it saw as the many reasons to ban Mr. Padilla. In a motion filed on Dec. 20, 2024, the regulator described Mr. Padilla as a former broker who, along with others, "endeavored to make money by participating in stock manipulation schemes involving the concealed-control of significant amounts of stock," with the shares sold during promotional campaigns, the SEC claimed.

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