Head of Melbourne medical company Romandetti faces stock fraud charges

The U.S. Securities and Exchange Commission has charged the head of a Melbourne-based medical company with being involved in illegal stock price manipulation related to his company.

Federal law enforcement officials were at the Indialantic home of Christian “Chris” Romandetti early Thursday as part of their investigation into what they’re calling a “boiler-room” scheme.

It was part of an investigation by the SEC of a Long Island, New York-based "boiler room" that previously was sued for defrauding "elderly and unsophisticated investors."

The latest charges allege that Romandetti, who is chairman, president and chief executive officer of First Choice Healthcare Solutions Inc., and four others, manipulated the company’s shares, generating more than $3.3 million of illegal profits and more than $560,000 in kickbacks for Romandetti.

The SEC’s complaint alleges that Romandetti, 57, and the other defendants duped more than 100 victims in a scheme that inflated First Choice’s stock price from less than $1 a share to $3.40 a share.

Messages left by FLORIDA TODAY for Romandetti at his corporate office in Melbourne were not returned.

According to the complaint, from at least September 2013 until about June 2016, the defendants used multiple accounts in an attempt to disguise their trading; engaged in manipulative trading practices; and hired Elite Stock Research, a boiler room run by defendant Anthony Vassallo, to promote First Choice to vulnerable investors, some of whom invested retirement savings.

“Microcap fraud continues to be a pervasive source of harm to retail investors,” Carolyn Welshhans, associate director of the SEC's Division of Enforcement, said in a statement. “Investors should be on the lookout for individuals employing methods like the ones we allege in our complaint — such as using unsolicited calls and high-pressure sales tactics.”

In a related action in July 2017, the SEC originally charged boiler room Elite Stock Research, as well as another Long Island boiler room and 13 individuals, with bilking victims out of more than $10 million through high-pressure sales tactics and lies about penny stocks. Seven of those individuals have pleaded guilty to parallel criminal charges brought by the U.S. Attorney’s Office for the Eastern District of New York. The SEC’s litigation against the 13 individuals is continuing.

Thursday's SEC action — filed in U.S. District Court for the Eastern District of New York in Central Islip — charges Romandetti, Vassallo, Mark Burnett, Jeffrey Miller, Frank Sarro and Elite Stock Research with fraud. It also charges Burnett, Miller, Sarro, and Vassallo with market manipulation.

According to the complaint, Sarro, a 63-year-old resident of Palm Bay, "controlled at least six entities and eight brokerage accounts that engaged in profitable and manipulative trading" in First Choice.

The SEC is seeking permanent injunctions, return of allegedly ill-gotten gains with interest, civil penalties, penny stock bars, and officer-and-director bars against Romandetti and Burnett.

In a parallel action, the U.S. Attorney’s Office for the Eastern District of New York announced criminal charges against Romandetti, Burnett, Miller, and Sarro.

Federal authorities were at Romandetti's Indialantic home at 7 a.m. Thursday. Town of Indialantic police assisted.

Romandetti, a well-known entrepreneur in South Brevard County, headed First Choice since 2010.

First Choice calls itself a "fully integrated, non-physician-owned, publicly traded health care delivery platform providing a full life cycle of orthopedic and spine care for patients through diagnosis, treatment and recovery."

The company last week reported revenue of $27.91 million for the first nine months of the current budget year, up from $23.62 million in the same period in 2017. It had a profit attributable to First Choice of $447,301 in the first nine months of 2018, compared with a loss of $369,454 for the first nine months of 2017.

In a statement accompanying the earnings report, Romandetti said: “During the third quarter, we continued to pursue and discuss attractive ancillary service opportunities to further enhance our buy and build initiatives. Further, we are pleased to announce our newest physical therapy site is scheduled to open mid-December.”

Wayne T. Price is business editor at FLORIDA TODAY.

Contact Price at 321-242-3658 or wprice@floridatoday.com.

You can also follow him on Twitter @Fla2dayBiz.

Dave Berman is government editor at FLORIDA TODAY.

Contact Berman at 321-242-3649

or dberman@floridatoday.com.

Twitter: @bydaveberman

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