Praxsyn homepage

A publicly traded South Florida company is accused of trying to capitalize on the COVID-19 pandemic with false promises of a huge N95 mask supply line and setting the minimum order at 100,000 masks.

West Palm Beach-based Praxsyn Corp. issued misleading mask promotions dating back to at least Feb. 27 when the virus was mostly an Asian phenomenon and the United States had 15 cases, the Securities and Exchange Commission charged Tuesday.

The company's microcap shares traded over the counter at 80 times the pre-coronavirus volume after promoting its high-volume mask supply line, the SEC civil complaint said. The agency temporarily suspended trading in the stock March 26, citing "blatantly false" Feb. 27 and March 4 news releases.

The company initially said it was "evaluating multiple orders and vetting various suppliers in order to guarantee a supply chain that can deliver millions of masks on a timely schedule" and followed up by saying it had a "direct pipeline from manufacturers and suppliers to buyers."

"Praxsyn never had either a single order from any buyer to purchase masks, or a single contract with any manufacturer or supplier to obtain masks, let alone any masks actually in its possession," the SEC complaint said. After regulatory inquiries, the company admitted in a March 31 release that it never had any masks.

The civil complaint charged the company traded as PXYN and CEO Frank Brady, 45, of Atlanta, with three counts of securities violations. Company securities are not registered with the SEC.

They are represented by Stanley Morris of Corrigan & Morris in West Los Angeles. The former senior SEC enforcement attorney had no comment when contacted Thursday but forwarded his April 20 response to an SEC investigation notice, which he said "appears to be a rush to judgment."

"Notwithstanding the staff's desperate attempt to create a false narrative that Praxsyn was exploiting the virus crisis to pump and dump its stock, there is no hint that anyone affiliated with Praxsyn made a penny trading securities," he wrote. "There is no dissipation of assets. This is not a cut and run scenario."

The SEC can show no intent to deceive, Morris said. His clients "are sympathetic to the public outcry" about coronavirus fraud and acted "reasonably, objectively, and subjectively in light of the circumstances." The March 31 release amounted to a retraction and the company "announced it would no longer pursue the protective mask business."

Paxsyn's spare homepage said the company is "empowering healthcare" and offers links to five financial statements. Its latest report listed 742 million shares of common stock, $81,378 in unaudited net revenue and $11.1 million in assets at the end of 2018.

Not even a penny stock, Praxsyn's share price ranged from $0.0048 and $0.009 a share in the three months before its first suspicious new release and climbed to a range of $0.0095 to $0.0188 on Feb. 27, the SEC said. Average daily trading value zoomed up from 384,165 shares to 30.8 million shares on the strength of the company announcements.

Florida corporate records filed April 20 list a company office in a coworking suite in one of West Palm Beach's top office buildings, Phillips Point West Tower on the water overlooking ritzy Palm Beach. The SEC complaint said Praxsyn is a Nevada corporation, and attachments to the Florida filing list Nevada records for the company dating back to 2015.

The company offers itself as a finance company that offers medical receivables financing to providers focused on personal injury and workers' compensation cases, the SEC said.

Morris said its Praxsyn Medical Inc. subsidiary is a wholesale medical supply business. The company relied on expert brokers but was "whipsawed by the volatile and evolving market."

Law enforcement agencies have been warning consumers to watch out for coronavirus scams since the pandemic was declared.

The company and its CEO "sought to exploit unsuspecting investors by issuing false and misleading press releases concerning Praxsyn's ability to source and supply N95 masks for the COVID-19 virus," SEC regional director Eric I. Bustillo in Miami said in a news release.

Steven Peikin, co-director of the SEC's enforcement division, said in a statement, "We will move swiftly against those who seek to profit off this national emergency by cheating or misleading investors."

The investigation was conducted by the SEC's Microcap Fraud Task Force. The case was filed by SEC senior trial counsel Robert Levenson, who filed notices that both defendants waived service.

The case was assigned to U.S. District Judge Rodolfo Ruiz in Fort Lauderdale, and answers to the SEC complaint are due June 29.

Read the complaint:

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