During a virtual SEC hearing in June 2021, Abujudeh alleges that Smith advised him to invoke his Fifth Amendment rights, contrary to his desire to cooperate. He also claims that Smith falsely informed him that the government and regulator were not interested in settlements, failing to pursue any negotiations with the DOJ or SEC.
The failure to cooperate, according to Abujudeh, led to his arrest by the FBI in July 2021, which occurred in front of his family. This arrest coincided with the SEC and DOJ filing suits against him for running microcap fraud schemes.
After retaining new counsel in August 2021, Abujudeh learned that Smith had never contacted the DOJ or SEC about a potential settlement. Abujudeh’s new counsel successfully negotiated with the DOJ, resulting in an agreement to avoid seeking incarceration or indictment. However, due to Smith’s previous adversarial stance, Abujudeh was compelled to accept a plea deal.
Abujudeh ultimately pled guilty in May 2022 to conspiracy to commit securities fraud, paying over $5 million in fines and agreeing to a five-year penny stock ban from the SEC and a lifetime ban from the DOJ, significantly impacting his income.
