Litigation Releases (Harry Zhabilov et al.)

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 26144 / September 30, 2024

Securities and Exchange Commission v. Harry Zhabilov et al.

, Civ. Action No. 1:24-cv-07362 (S.D.N.Y. filed Sept. 30, 2024)

SEC Charges Ten Defendants in Microcap Fraud Scheme

The Securities and Exchange Commission today charged Harry Zhabilov, Billy Ray, Jr., Charles Dilluvio, Stephen Apolant, Dannie Zhabilov, Jonathan Farber, and four related entities with running a microcap fraud scheme targeting retail investors. The defendants were involved in different parts of the scheme involving a publicly traded company that generated approximately $92 million in illicit stock sale proceeds.

According to theSEC's complaint,Enzolytics, Inc. was a Delaware-based company whose stock was publicly traded. Harry Zhabilov, Ray, Dilluvio, and Apolant (the "Control Group"), along with the entities Camelot Nevada Trust, Seacor Capital, Inc., and Sky-Direct LLC, allegedly took steps to accumulate Enzolytics stock while concealing their control of the company and the stock, then sold that stock in large quantities to retail investors. The complaint alleges that Harry Zhabilov's daughter, Dannie, worked with the Control Group to transfer millions of Enzolytics shares to Farber. Farber then allegedly sold those and other Enzolytics shares on behalf of the Control Group using an entity he controlled, Wexford Industries Ltd. According to the complaint, the Control Group attempted to generate more investor interest in Enzolytics stock by funding a stock promotion campaign promoting Enzolytics stock while Farber was selling on behalf of the Control Group. The defendants allegedly made various misrepresentations that allowed them to circumvent certain stock sale limitations placed on company affiliates.

The SEC's complaint, filed in the U.S. District Court for the Southern District of New York, alleges that Harry Zhabilov, Ray, Dilluvio, Apolant, Dannie Zhabilov, Farber, Camelot, Seacor, Sky-Direct, and Wexford violated Sections 5(a) and 5(c) 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. Farber and Wexford are also charged with violating Section 15(a)(1) of the Exchange Act. The SEC is seeking permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties as to all defendants. The relief sought by the SEC also includes penny stock bars against Harry Zhabilov, Apolant, Dannie Zhabilov, Farber, Camelot, Seacor, Sky-Direct, and Wexford; officer and director bars against Harry Zhabilov, Dilluvio, and Apolant; and an injunction against Dilluvio and Ray prohibiting them from participating in the offer and sale of securities, except from their personal accounts. The complaint also names as relief defendants NY Farms Group, Inc. and Equity Markets ADV LLC, alleging that they each received proceeds of the alleged scheme. The complaint seeks disgorgement and prejudgment interest from the relief defendants.

The SEC's case is being handled by Nita Klunder, Marc Jones, Mark Albers, and Amy Gwiazda of the Boston Regional Office, with the assistance of Alex Lefferts and Howard Kaplan of the Enforcement Division's Office of Investigative & Market Analytics. The SEC appreciates the assistance of the Financial Industry Regulatory Authority and the British Columbia Securities Commission.