Securities and Exchange Commission v. David Ronald Allen, et al., Civil Action No. 3:11-CV-882-O (N.D. Tex.)
SEC OBTAINS FINAL JUDGMENT IN CASE INVOLVING PONZI SCHEME AND PROMOTION OF CHINA VOICE HOLDING CORP.
Recently, the Honorable Reed O’Connor, United States District Judge for the Northern District of Texas, entered a final judgment against Ilya Drapkin, permanently enjoining him and ordering monetary relief.
The final judgment permanently enjoins Drapkin from violating Section 17(a)(3) of the Securities Act of 1933. Drapkin previously consented to the injunction to settle charges that he sold shares of China Voice Holding Corp. while financing stock promotion campaigns encouraging investors to buy shares. The final judgment orders Drapkin, and his company, MG TK Corp., to pay $3,754,004 in disgorgement and prejudgment interest and a civil penalty of $1,554,080. The final judgment also orders Drapkin and MG TK to pay an additional $493,606 in disgorgement and prejudgment interest and Drapkin and his company SMI Chips, Inc. to pay $74,270 in disgorgement and prejudgment interest. These figures represent the profits gained by Drapkin, MG TK, and SMI Chips from a Ponzi scheme run by China Voice’s former CFO, David Ronald Allen, and other associates. In addition, Drapkin is barred from participating in offerings of penny stocks.
The Commission’s complaint, originally filed on April 28, 2011, alleged that China Voice, Allen, and former CEO and President William F. Burbank IV made a series of false and misleading statements and omissions regarding China Voice’s financial condition and business prospects. In addition, the SEC charged China Voice shareholders Drapkin and Gerald Patera with financing stock promotion campaigns regarding China Voice. These campaigns included a blast fax campaign conducted by Robert Wilson. The Commission further alleged that Allen, with the assistance of Alex Dowlatshahi and Christopher Mills, launched what became a Ponzi scheme that sought to raise at least $8.6 million from investors around the country.
The Court previously entered final judgments against Burbank, Allen, China Voice, Patera, and various of their companies, to which they all consented. The Commission previously entered into settlements with Dowlatshahi, Mills, Wilson, and various of their companies, and final judgments against these defendants are pending.