FOR IMMEDIATE RELEASE
Washington D.C. — The Securities and Exchange Commission today charged Giga Entertainment Media Inc. and five of its former officers and directors—Gary Nerlinger, Jarret Streiner, Lawrence Silver, Alfred Colucci, and Charles Noska—with fraud in connection with a scheme to mislead investors.
According to the SEC’s complaint, between February and August 2016, the company bought at least 559,662 downloads from outside marketing firms to boost the profile of the company’s mobile app, SELFEO. These firms provided Giga with a shortcut to propel its app to the top of the Apple Store download rankings. But instead of disclosing the real cause of the app’s artificial meteoric rise, the company misled its shareholders into believing that this success was due to traditional marketing tactics like billboards and radio advertisements. The complaint alleges that when the company stopped paying for downloads in August 2016, the app’s rankings on the Apple Store plummeted. Rather than come clean about the fact that the spike in downloads was a result of paid download campaigns, the company, Nerlinger, Streiner, and Colucci lied and told shareholders that the number of downloads continued to grow at the same high rate. Further, Nerlinger, Silver, Colucci, and Noska lied and falsified documents to conceal Nerlinger’s role as Giga’s de facto CEO to prevent the investors from discovering his prior criminal conviction for mail fraud.
“Exposing Giga’s fraud should remind companies that they cannot buy a crowd and then claim to be popular,” said Melissa R. Hodgman, Associate Director of Enforcement. “Tech companies can buy clicks or employ other new marketing tools to improve their on-line image, but they have to be honest with investors when touting the fruits of such efforts.”
Without admitting or denying the findings, Giga, Nerlinger, Silver, Colucci, Noska, and Streiner consented to the entry of an SEC order finding that they violated the antifraud provisions, and a finding that Giga violated registration provisions of the federal securities laws. Colucci and Noska each agreed to a $25,000 penalty, and Streiner agreed to a $15,000 penalty. The court will determine what penalty Silver will pay and what disgorgement and penalty Nerlinger will pay. In addition, Nerlinger, Silver, and Colucci each agreed to a permanent officer and director bar, and Streiner agreed to a five-year bar.
The SEC’s investigation was conducted by Christopher R. Mathews and Edward B. Gerard and supervised by J. Lee Buck II in the Washington, DC headquarters. Nicholas A. Pilgrim will serve as the trial attorney.