Showing posts with label PENNY STOCK. Show all posts
Showing posts with label PENNY STOCK. Show all posts

Wednesday, December 10, 2014

SEC CHARGES STOCK PROMOTER FOR ROLE IN PUMP-AND-DUMP SCHEME INVOLVING AN AIRPORT SECURITY BUSINESS

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

The Securities and Exchange Commission today charged a penny stock promoter in Montana with orchestrating a fraudulent pump-and-dump scheme involving the stock of a Northern Virginia-based company that claims to be in the airport security business.

The SEC alleges that Matthew Carley, who lives in Bozeman, Mont., engineered a reverse merger and gained control of free-trading shares of Red Branch Technologies located in Ashburn, Va.  Carley then orchestrated two blast e-mail campaigns promoting Red Branch stock, and he timed the e-mails to coincide with the dissemination of materially false and misleading company press releases touting technology related to airport security and homeland security.  However as Carley well knew, Red Branch had no true business operations and no sales revenue.  Once the promotional campaigns generated dramatic increases to Red Branch’s share price and trading volume, Carley immediately sold several million Red Branch shares for $789,478 in unlawful profits.

Carley agreed to settle the SEC’s charges and be barred from the penny stock industry.

“From behind the scenes, Carley took advantage of unwitting investors by funding and coordinating promotional hype for a company with no real revenues, and he cashed in by dumping his own shares once he created demand for the stock,” said Stephen L. Cohen, Associate Director of the SEC’s Division of Enforcement.

The SEC’s complaint, which was filed in U.S. District Court for the Eastern District of Virginia, alleges that Carley violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5.

A parallel criminal case against Carley was announced today by the U.S. Attorney’s Office for the Eastern District of Virginia.

The settlement with the SEC, subject to court approval, would bar Carley from participating in any future penny stock offering and permanently enjoin him from future violations of the antifraud provisions.  He is liable for disgorgement and prejudgment interest of $921,232 that he is anticipated to pay as part of his obligations in the criminal case.

The SEC’s investigation, which is continuing, is being conducted by Christopher R. Mathews and supervised by J. Lee Buck II.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the Eastern District of Virginia, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority.

Friday, September 12, 2014

SEC SETTLES HEART TRONICS, INC., FRAUD CHARGES AGAINS FORMER CEO

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

Litigation Release No. 23081 / September 10, 2014

Securities and Exchange Commission v. Heart Tronics, Inc., et al., Civil Action No. SACV11-1962-JVS (C.D. Cal. filed Dec. 15, 2011)

SEC Settles Fraud Charges Against Former Heart Tronics CEO and Former Registered Representative.

The Securities and Exchange Commission announced that J. Rowland Perkins, II and Mark C. Nevdahl have settled charges arising out of their involvement with Heart Tronics, Inc., a microcap company formerly known as Signalife, Inc. that the SEC has alleged engaged in a series of frauds between 2006 and 2009.  As part of the settlement, Perkins will pay a penalty of $42,500 and is now barred for three years from serving as an officer or director of a public company or engaging in an offering of penny stock.   He also consented to the full injunctive relief sought by the SEC.  Nevdahl, in his settlement, will pay a civil penalty of $13,000 and was ordered to cease and desist from aiding or abetting or committing any future violations.  Nevdahl also was suspended for six months from associating with certain regulated entities and from participating in any offering of penny stock.  The SEC’s litigation against Heart Tronics, its co-CEO, Willie Gault, and a former attorney, Mitchell Stein, is continuing.  Stein is currently incarcerated while awaiting sentencing, after a jury returned a verdict in May 2013 convicting him of fourteen felonies for his role.

According to the SEC’s complaint, Perkins, acting as CEO in 2008, signed and certified pursuant to the Sarbanes-Oxley Act of 2002 three quarterly reports Heart Tronics filed with the SEC that contained material misstatements about the company’s sales orders, potential customers, and internal accounting and disclosure controls.  The SEC alleged, among other things, that Perkins knew of significant red flags indicating that Heart Tronics’ purported sales orders in 2007 and 2008 were fictional yet allowed the orders to be publicly disclosed without taking adequate steps to determine their validity.  Neither admitting nor denying the SEC’s allegations, Perkins consented to a final judgment ordering him to pay a civil penalty of $42,500 and enjoining him from violating Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5 and 13a-14 thereunder, or aiding and abetting violations of Exchange Act Section 13(b)2)(B).  He also consented to court-imposed, three-year officer and director and penny stock bars. The court entered a final judgment against Perkins on September 4, 2014.

The SEC’s complaint also alleged that Nevdahl, who, at the time, was a registered representative of an SEC-registered broker-dealer, served as the trustee for a number of nominee accounts and blind trusts that Mitchell Stein and his wife used to secretly and unlawfully sell millions of dollars’ worth of Heart Tronics stock.  According to the complaint, the trusts were designed to create the façade that the shares were under the control of Nevdahl as an independent trustee, but Nevdahl met the Steins’ regular demands for cash by continually selling Heart Tronics stock on the public market and in transactions negotiated by Stein.  Without either admitting or denying the SEC’s allegations, Nevdahl consented to pay a penalty of $13,000 to resolve the SEC’s action.  Nevdahl also consented to the institution and settlement of administrative cease-and-desist proceedings in which the SEC issued an order finding that he willfully violated Section 17(a)(3) of the Securities Act, ordering him to cease and desist from aiding or abetting or committing any future violations, and suspending him from participation in any penny stock offering for a period of six months.  The order also suspended Nevdahl for six months from associating with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical organization, and from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company.  The court entered a final judgment against Nevdahl on August 29, 2014, and the Commission issued its Order on September 5, 2014.

For further  information, see Litigation Release No. 22204 (Dec. 20, 2011).

Saturday, July 19, 2014

SEC CHARGES ALLEGED CON ARTIST AND PENNY STOCK CEO WITH ISSUING FALSE PRESS RELEASES

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

Securities and Exchange Commission v. Christopher Plummer, Lex M. Cowsert, and CytoGenix, Inc., Civil Action No. 14-CV-5441 (LTS)

The Securities and Exchange Commission charged a serial con artist and a penny stock company CEO with misleading investors in a supposed vaccine development company by issuing false press releases portraying it as a successful venture when it was in fact a failing enterprise.

The SEC alleges that Christopher Plummer teamed up with the CEO of CytoGenix, Lex M. Cowsert, to defraud investors with extravagant claims about the microcap company's revenue and other benefits flowing from a "shared revenue agreement" with Franklin Power & Light, an electricity provider supposedly operated by Plummer. However, Plummer's entity was a complete sham, CytoGenix had actually lost all of its vaccine patents and other intellectual property in a lawsuit, and Plummer and Cowsert stole proceeds of CytoGenix stock offerings that they told investors would be used for energy production projects and other corporate purposes.

According to the SEC's complaint filed against CytoGenix, Cowsert, and Plummer in federal district court in Manhattan, Plummer also spearheaded a separate scheme around the same time in 2010 involving another microcap company that similarly issued a rapid-fire series of press releases with bogus information. Those press releases touted a purported partnership with Plummer's phony power company to own and operate solar energy farms across the country. In reality, the microcap issuer was in dire financial straits and lacked the financial or logistical capability to commercially produce a product of any kind let alone break ground on energy farms. The company continues to have no operations, customers, or revenues.

Trading in CytoGenix and the other microcap stock was suspended by the SEC as part of a mass trading suspension in 2011. The two companies are now either dormant or defunct. Plummer is currently serving a multi-year federal prison term for an unrelated fraud, and he also has two prior convictions for fraud offenses.

According to the SEC's complaint, CytoGenix was in dire financial straits when Plummer approached Cowsert and proposed a partnership with the sham company he created, Franklin Power & Light. Cowsert agreed and began issuing a series of false press releases, including one touting the formation of a new CytoGenix subsidiary to operate as a joint venture with Plummer's company to develop "biologically-based" technologies for energy production in untapped retail electrical markets. Cowsert had no basis for believing that Plummer's company had the means to generate the revenue needed to fund such energy production technologies, yet he nonetheless prepared and authorized the CytoGenix press releases with the materially false and misleading information about Franklin Power & Light that Plummer supplied.

The SEC's complaint further alleges that other CytoGenix press releases unrelated to the partnership with Plummer touted outdated test results and a non-existent new laboratory for testing the vaccine products that CytoGenix claimed to be developing. These materially false and misleading statements were made despite CytoGenix having lost its assets in litigation with two former employees, including the rights to various vaccine patents and other intellectual property featured in press releases. These CytoGenix press releases failed to disclose the loss of those critical assets.

According to the SEC's complaint, Cowsert and Plummer further defrauded CytoGenix shareholders by misappropriating the proceeds of purported private offerings. Cowsert obtained approximately $91,000 in funds directly from CytoGenix investors by falsely telling them that they were investing in a private placement of CytoGenix stock, but no shares were ever issued to the investors. Cowsert asked the investors to make their checks payable to him personally, deposited the checks into his personal bank account, and used the funds to pay personal expenses. Meanwhile, Plummer defrauded a shareholder out of more than 6.5 million free trading shares of CytoGenix stock.

The SEC's complaint charges Plummer, Cowsert, and CytoGenix with violating antifraud provisions of the federal securities laws. Plummer is additionally charged with violating Section 20(b) of the Securities Exchange Act of 1934. The SEC seeks permanent injunctions along with disgorgement, prejudgment interest, financial penalties, and orders barring Plummer and Cowsert from acting as officers or directors of a public company and from participating in a penny stock offering.

The SEC's investigation, which is continuing, has been conducted by Justin P. Smith and George N. Stepaniuk of the New York office, and supervised by Sanjay Wadhwa. The SEC's litigation will be led by Paul G. Gizzi. The SEC appreciates the assistance of the U.S. Attorney's Office for the District of Connecticut and the Federal Bureau of Investigation.

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