The Securities and Exchange Commission recently announced charges against two individuals involved in a fraudulent scheme to offer for sale a penny stock by filing false and misleading registration statements with the Commission.

According to the SEC’s complaint filed in U.S. District Court for the District of Maryland, Douglas Roe, a resident of Vancouver, British Columbia, teamed with Donald Lindo, a resident of Kingston, Jamaica, in an attempt to register for sale shares of Blue Mountain Eco Tours, Inc. The complaint alleges that Roe and Lindo engaged in a scheme to file the registration statements that they knew or were reckless in not knowing contained false statements.

The complaint alleges, among other things, that Blue Mountain’s registration statements:

• Falsely identify Lindo as Blue Mountain’s sole officer, director and employee, when, in fact, Lindo was a mere figurehead The complaint further alleges that Lindo blindly signed management representation letters and loan verification documents sent to Blue Mountain’s auditors.
• Fail to disclose that Roe was a control person of Blue Mountain. According to the complaint, Roe enlisted Blue Mountain’s attorney, auditors, and accountant and controlled the company’s communications with these professionals. Additionally, Roe used his own monies to pay professional fees for auditing services critical to facilitating Blue Mountain’s registration statements.
• Falsely state that Lindo loaned money to Blue Mountain for working capital purposes; and
• Falsely state that Blue Mountain had partially repaid the loan to Lindo.

The SEC’s complaint charges Roe and Lindo with violating Sections 17(a)(1) and (3) of the Securities Act of 1933. The SEC seeks financial penalties, permanent injunctions, officer-and-director bars and penny stock bars against both defendants.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

Securities and Exchange Commission v. Fortitude Group, Inc., et al., Civil Action No. 1:16-cv-00050-SPB (W.D. Pa. filed Feb. 29, 2016)

Securities and Exchange Commission v. Strategic Global Investments, Inc., et al., Civil Action No. 3:16-cv-00514-H-JLB (S.D. Ca. filed Feb. 29, 2016).

SEC Charges Penny Stock Issuers and Their Principals with Fraud in Connection with Marijuana-Related Investments

The Securities and Exchange Commission recently charged two penny stock issuers and their principals with fraud for disseminating false and misleading press releases and other related documents about purported involvement in the marijuana industry.

The SEC’s complaint against Fortitude Group, Inc. and its CEO, Thomas Parilla, filed in federal court in Pennsylvania on February 29, 2016, alleges that:

• Between February and March 2014, Fortitude and Parilla made materially false and misleading statements in various publicly-disseminated press releases and a financial report concerning Fortitude’s purported efforts to enter into the rapidly growing legal marijuana business industry.
• The press releases falsely described Fortitude as having successful marijuana-related partnerships and operations, including claims about itsissuance of a Discover-branded debit card and distribution of vaporizers to marijuana dispensaries.
• Fortitude and Parilla falsely represented in a company financial report that Fortitude was earning revenue from the purported marijuana business.

The SEC’s complaint against Strategic Global Investments, Inc., and its CEO, Andrew T. Fellner, filed in federal court in California on February 29, 2016, alleges that:

• Several press releases Strategic publicly disseminated in February 2014 falsely portrayed that Strategic owned a revenue-generating marijuana cultivation facility in Teller County, Colorado.
• At no time did Strategic have the ability to operate in the marijuana business space or legally generate revenue from the sale of marijuana generated from its purported cultivation facility in Teller County, Colorado.
• Strategic also lacked the requisite licensure and other corporate infrastructure to run a successful marijuana-related business.
• These defendants made material misrepresentations and omissions in a January 2014 securities offering by failing to disclose in offering documents filed with the SEC that Strategic had used investor proceeds to enter the marijuana business and that Strategic had later decided to exit that business.

Both of the SEC’s complaints allege that the defendants violated Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5(b) thereunder. The complaints also allege that each of Parilla and Fellner aided and abetted his respective issuer’s violations of Section 10(b) of the Exchange Act and Rule 10b-5(b) thereunder. The complaint against Strategic and Fellner further alleges that both defendants violated Section 17(a)(2) of the Securities Act of 1933, and that Fellner also aided and abetted Strategic’s violations of Section 17(a)(2). The Commission’s complaints seek permanent injunctions and civil penalties against the defendants, and officer-and-director and penny stock bars, respectively, against Parilla and Fellner.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

Securities and Exchange Commission v. Guy Gentile, Civil Action No. 16-CV-1619 (JLL) (D.N.J.)

SEC Charges New York Man with Conducting Penny Stock Manipulation Schemes

On March 23, 2016, the Securities and Exchange Commission charged Guy Gentile, a resident of Putnam Valley, New York, with perpetrating penny stock manipulation schemes.

The SEC alleges that Gentile, who at the relevant time owned and operated a registered broker-dealer based in Carmel, New York, engaged in manipulative trading, provided illegal kick-backs, and distributed promotional mailings of glossy “newsletters” with fake publication names like “Stock Trend Report” and “Global Investor Watch,” in order to tout the stocks of purported gold and silver exploration company Raven Gold Corporation (RVNG) and natural gas production company Kentucky USA Energy (KYUS). The newsletters misled investors with purportedly positive – but fake – price and volume trends for these stocks and other false information about the promoters’ identity, compensation, and control of the stock. In reality, most of the touted market activity was generated by Gentile and his associates who controlled large blocks of the companies’ stocks. Last year, the SEC charged attorney Adam Gottbetter for his role in the KYUS scheme, as well as Canadian stock promoters Mike Taxon and Itamar Cohen for their roles in the RVNG and KYUS schemes.

The SEC’s complaint filed in federal court in New Jersey alleges that Gentile violated Sections 5(a), 5(c), 17(a) and 17(b) of the Securities Act of 1933, and violated and aided and abetted violations of Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5. The SEC seeks disgorgement of ill-gotten gains, civil money penalties, injunctions against future violations, and a bar against participation in penny stock offerings.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

The Securities and Exchange Commission (SEC) recently announced fraud charges against several alleged perpetrators behind a $78 million pump-and-dump scheme involving the stock of Jammin’ Java, a company that operates as Marley Coffee and uses trademarks of late reggae artist Bob Marley to sell coffee products.

The SEC alleges that Jammin Java’s former CEO Shane Whittle orchestrated the scheme with three others who live abroad and operate entities offshore. Whittle utilized a reverse merger to secretly gain control of millions of Jammin Java shares, and he spread the stock to the offshore entities controlled by Wayne Weaver of the UK and Canada, Michael Sun of India, and René Berlinger of Switzerland. The shares were later dumped on the unsuspecting public after the stock price soared following fraudulent promotional campaigns.

Charged with fraudulently promoting Jammin’ Java stock to investors are British twin brothers Alexander Hunter and Thomas Hunter, who were previously charged in a separate SEC case for touting multiple penny stocks using a fake stock picking robot. Others charged in the SEC’s complaint with facilitating the illegal offering through their offshore entities are UK citizens Stephen Wheatley and Kevin Miller and Oman resident Mohammed Al-Barwani.

According to the SEC’s complaint filed in U.S. District Court for the Central District of California:

• Whittle, a stock promoter, befriended the son of Bob Marley in Los Angeles. After learning of Marley’s purchase of a small Jamaican coffee farm, Whittle proposed the creation of a large-scale coffee distribution business built on the Marley name.
• To raise capital for the Marley venture, Whittle identified publicly-traded shell company Global Electronic Recovery Corp. (GERC), which was a purported waste management business in Los Angeles. He executed a reverse merger between GERC and Marley Coffee, which later became Jammin’ Java and trades under the ticker symbol JAMN.
• In connection with the reverse merger, Whittle secretly gained control of millions of shares that previously had been issued to foreign nominees.
• Using his access and control of Jammin’ Java and its stock, Whittle and others coordinated an illegal offering and the fraudulent promotion of Jammin’ Java’s stock in a pump-and-dump scheme that culminated in the middle of 2011.
• In anticipation of the promotion, Whittle distributed some of the nominee stock to offshore entities controlled by Weaver, Sun, and Berlinger.
• To boost the stock price and provide cash to Jammin’ Java, Whittle, Weaver, Sun, and Berlinger orchestrated a sham financing arrangement designed to create the false appearance of legitimate third-party interest and investment in the company.
• Jammin’ Java’s announcement of the financing agreement and other company announcements – together with coordinated trading by entities connected to the scheme – caused the stock price to rise.
• To conceal his control of the stock and other aspects of the scheme, Whittle made material misstatements and misleading omissions in beneficial ownership reports filed with the SEC.
• Whittle distributed another large block of stock to offshore entities, including those controlled or owned by Weaver, Sun, Berlinger, Wheatley, Miller, and Al-Barwani. To conceal their interest, Whittle, Weaver, Sun, and Berlinger failed to disclose their beneficial ownership of Jammin’ Java stock.
• The Hunters published false stock newsletters and took other steps to hype the stock and send the share price sharply upward.
• With Jammin’ Java’s stock value artificially inflated, the defendants and others coordinating with them dumped 45 million shares on the public market without registering the transactions, making at least $78 million in illicit profits in the process.
• Weaver, Sun, and Berlinger funneled $2.5 million in profits to Jammin’ Java under the guise of the sham financing arrangement that launched the promotion.
• Jammin’ Java’s share price and volume began to collapse a few days after the company disclosed on May 9, 2011, that it became aware of an unauthorized and unaffiliated online stock promotion. The stock fell further after the company released disappointing financial results in its annual report.

The SEC’s complaint charges Jammin’ Java, Whittle, Weaver, Sun, Berlinger, Wheatley, Miller, and Al-Barwani with conducting an illegal offering in violation of Sections 5(a) and 5(c) of the Securities Act of 1933. The complaint further alleges that Whittle, Weaver, Sun, Berlinger, and the Hunters violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and Whittle, Weaver, Sun, and Berlinger violated Section 13(d) of the Exchange Act and Rules 13d-1 and 13d-2. Whittle is additionally charged with violating Section 16(a) of the Exchange Act and Rule 16a-3, and the Hunters are charged with violations of Sections 17(b) of the Securities Act, which prohibits fraudulent touting of stock.

The SEC is seeking injunctions, disgorgement, prejudgment interest, and penalties as well as penny stock bars against all of the individuals and an officer-and-director bar against Whittle.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

SEC Charges New York Lawyer and Two Promoters With Market Manipulation

The Securities and Exchange Commission recently announced fraud charges against a securities lawyer who used his New York law office as the headquarters for planning and implementing market manipulation schemes. Also charged were two stock promoters from Canada who assisted him.

The SEC alleges that Adam S. Gottbetter orchestrated promotional campaigns that touted the prospects of microcap companies and enticed investors to buy their stock at inflated prices so he and his cohorts could sell shares they controlled and reap massive profits. Gottbetter enlisted Mitchell G. Adam and K. David Stevenson to help him in the last of three schemes he conducted in a six-year period. They repeatedly cautioned each other about the dangers of missteps that might draw law enforcement attention to the scheme, such as failing to keep secret the identities of Adam and Stevenson. The three rehearsed stories they would tell if ever questioned by law enforcement. During one meeting in New York City, Gottbetter complained about the difficulties of stock manipulation but conceded that robbing a bank was the only other way to make so much money so quickly.

Gottbetter agreed to pay $4.6 million to settle the SEC’s charges. Stevenson also agreed to settle the SEC charges against him while a case against Adam will be litigated in federal court in Newark, N.J.

In a parallel action, the U.S. Attorney’s Office for the District of New Jersey today announced criminal charges against Gottbetter, Adam, and Stevenson.

According to the SEC’s complaint, Gottbetter was involved in the manipulation of the stocks of Kentucky USA Energy Inc. (KYUS) and Dynastar Holdings Inc. (DYNA) before teaming up with Adam and Stevenson in July 2013 to utilize their offshore ties for a new and potentially more lucrative scheme. Together they schemed to drive up the stock price for purported oil and gas exploration company HBP Energy Corp. (HBPE) through fraudulent trades generated by a trading algorithm. They then planned to launch an extensive promotional campaign featuring multiple call centers, roadshows, and a listing on the Frankfurt Stock Exchange. After creating the false appearance of liquidity and investor interest, they planned to dump their shares of the stock on unsuspecting investors around the world. While Stevenson and Adam managed to do some small coordinated trades, the scheme was thwarted before the planned manipulation and promotion could be launched when Stevenson was arrested by the FBI.

The SEC’s complaint alleges that Gottbetter violated Sections 5(a), 5(c) and Section 17(a) of the Securities Act of 1933, and violated and aided and abetted violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The complaint alleges that Adam and Stevenson violated and aided and abetted violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.

Gottbetter agreed to be barred from the penny stock industry in addition to paying $4.6 million in disgorgement and prejudgment interest from ill-gotten gains in the Kentucky USA Energy manipulation scheme. He consented to injunctions against future violations. Stevenson also agreed to be barred from the penny stock industry and consented to an injunction against future violations. The settlements are subject to court approval.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

Securities and Exchange Commission v. David Carven et. a. Civil Action No. 15-cv-1820 (S.D.N.Y.)

SEC Files Emergency Action Against Father and Son Behind Pump and Dump Scheme, Obtains Asset Freeze

The U.S. Securities and Exchange Commission recently filed an emergency action ex parte against David Craven and Alex J. Craven, a father and son who manipulated the public market for shares of microcap issuer American Energy Development Corp. (AEDC) in violation of the securities laws. The Complaint alleges that by the middle of 2011, David Craven and Alex Craven, who are British citizens residing in Switzerland and England, respectively, gained control of over 87% of the purportedly non-restricted shares of AEDC through nominee companies under their control. Then, between October 2011 and February 2012, the Cravens inflated AEDC’s share price through deceptive “wash trading” and “matched trading.” Shortly thereafter, they secretly funded a $1.6 million promotional campaign for AEDC stock that involved a 16-page mailer being sent nationwide in April and May 2012 to 1.2 million U.S. residents. The Cravens’ deceptive trading and the mailer’s rosy predictions succeeded in driving up the price for and daily trading volumes in AEDC stock, which allowed the Cravens to dump over $4 million worth of artificially inflated AEDC stock on unsuspecting investors through numerous overseas trading accounts under their control.

The SEC’s Complaint alleges that the Cravens violated Sections 17(a)(1), (2) and (3) of the Securities Act of 1933 and Sections 9(a)(1) and (2) and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder. The SEC’s Complaint also names David Craven’s wife, Anna Craven, as a relief defendant.

According to documents filed simultaneously with the SEC’s Complaint in federal court in Manhattan, David Craven is actively attempting to sell property he owns jointly with Anna Craven in Florida. The Court’s order freezes David Craven’s and Anna Craven’s U.S. assets. Pursuant to the order, the Commission has taken immediate action to freeze David and Anna Craven’s U.S. assets, which include property in Florida and Kentucky and a bank account in Florida.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

SEC Charges Three Penny Stock Promoters Behind Pump-and-Dump Schemes

The Securities and Exchange Commission recently charged three penny stock promoters with conducting pump-and-dump schemes involving stocks they were touting in their supposedly independent newsletters.

The SEC alleges that Anthony Thompson, Jay Fung, and Eric Van Nguyen worked in coordinated fashion to gain control of a large portion of shares in the stock of microcap companies and then hyped those stocks in newsletters they distributed to prospective investors. After creating demand for the stock and increasing the value, they sold their holdings at the higher prices and earned significant profits. Once they stopped their promotional efforts, the demand for the stocks subsided and the prices dropped, leaving investors who had purchased the promoters’ shares with significant losses.

According to the SEC’s complaint filed in federal court in Manhattan, the newsletters published by Thompson, Fung, and Van Nguyen misleadingly stated that they “may” or “might” sell shares they owned when in reality their intentions always were to sell the stocks they were promoting. In fact, in some instances they already were selling the stocks to which they were saying “may” or “might” sell. They also failed to fully disclose in their newsletters the amounts of compensation they were receiving for promoting the stocks, cloaking the fact that they were coordinating their promotion of the penny stocks to deliberately increase the prices and dump their own shares.

According to the SEC’s complaint, the three promoters conducted five separate schemes that resulted in more than $10 million in ill-gotten gains. The penny stocks they manipulated were Blast Applications Inc., Smart Holdings Inc., Blue Gem Enterprise Inc., Lyric Jeans Inc., and Mass Hysteria Entertainment Company Inc. Thompson, who lives in Bethesda, Md., distributed several electronic penny stock promotion newsletters with such names as FreeInvestmentReport.com and OxofWallStreet.com. Fung, who resides in Delray Beach, Fla., distributed his newsletters at such websites as PennyPic.com, and Van Nguyen was typically based in Canada and distributed electronic penny stock promotion newsletters on such websites as UnrealStocks.com and InsanePicks.com.

The SEC’s complaint names two relief defendants for the purposes of recovering money in their possession that resulted from the schemes. Thompson’s wife Kendall Thompson received $200,000 in proceeds from one of the stock manipulation schemes. John Babikian, who operated a penny stock promotion business primarily from a website named AwesomePennyStocks.com, received $1 million as a result of one of the schemes. In a separate SEC case involving a different scheme, a court ordered $3.73 million in sanctions against Babikian.

The SEC’s complaint charges Thompson, Fung, and Van Nguyen with violating the antifraud and anti-touting provisions of the federal securities laws and related rules. The SEC is seeking disgorgement of ill-gotten gains from the schemes plus prejudgment interest and penalties as well as permanent injunctions against further violations of the securities laws.

Thompson and Fung also were named in a separate SEC case for their roles in a Florida-based scheme in which they promoted a penny stock in their newsletters without adequately disclosing they were selling their shares in the same stock and receiving compensation for their promotional efforts. A court issued a final judgment requiring them to pay more than $1 million combined.

SEC Charges Penny Stock Company Executives in New Jersey With Issuing False Press Releases to Inflate Stock Price

The Securities and Exchange Commission recently charged father-and-son executives at a New Jersey-based penny stock company for issuing false and misleading press releases while secretly selling thousands of their own stock shares into the market. They agreed to pay nearly $325,000 and accept officer-and-director bars to settle the SEC’s charges.

Conolog Corporation’s public filings state that it manufactures communications equipment primarily for use by electric utilities, fiber optic service providers, and the military. The SEC alleges that Conolog issued three consecutive press releases in early 2010 with distorted information at the behest of chairman and then-CEO Robert Benou with assistance from his son and company president Marc Benou. Among the company’s mischaracterizations were that Conolog had secured $1.9 million in new equipment orders when, in fact, only $50,000 worth of new orders had been received at the time. Conolog also created the misimpression that it had developed new fiber optic technology that was fully vetted and ready for commercial use and sale. Marc Benou was quoted saying it “surpassed our expectations in field tests” when in reality there had been no independent third-party testing as implied in the press release. The “testing” was merely an in-house demonstration of the product.

According to the SEC’s complaint filed in federal court in Newark, N.J., Robert Benou hired a public relations firm to promote Conolog’s stock using the false and misleading statements from the press releases. The promotional efforts significantly increased the company’s stock price and trading volume, and Robert and Marc Benou made combined profits of more than $81,000 through undisclosed sales of some of their stock holdings at the artificially inflated prices. They also each violated the federal securities laws requiring company insiders to disclose information about their holdings and transactions in company stock so other investors are aware of their moves.

The SEC’s complaint charges Conolog Corporation and the Benous with violating the antifraud provisions of the federal securities laws. The complaint charges Robert and Marc Benou with violating securities law provisions requiring officers and directors of public companies to report their transactions in the company’s stock within two business days, and requiring all owners of more than 5 percent of a company’s stock to timely report the size of their holdings and any material changes to them.

Robert Benou agreed to settle the charges without admitting or denying the allegations by paying $77,490 in disgorgement of illegal profits made from selling Conolog stock as the misleading press releases were issued. He also must pay prejudgment interest of $12,400 and a penalty of $177,490, and will be permanently barred from acting as an officer or director of a public company or participating in penny stock offerings. Marc Benou agreed to settle the charges by paying disgorgement of $4,191 plus prejudgment interest of $671 and a penalty of $51,250. He will be barred for at least two years from acting as an officer or director of a public company or participating in penny stock offerings. The settlement is subject to court approval.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

SEC v. Patrick G. Rooney, John R. Rooney, and Positron Corporation, Civil Action No. 9:14-cv-81224-KAM (U.S. District Court for the Southern District of Florida)

The Securities and Exchange Commission announced that on September 30, 2014 it filed a civil injunctive action charging Positron Corporation, a microcap company based in Westmont, Ill., Patrick G. Rooney of Oak Brook, Ill., the company’s then-CEO, and John R. Rooney of Jupiter, Fla., a penny stock promoter, for orchestrating a market manipulation scheme involving the company’s stock.

According to the SEC’s complaint filed in the United States District Court for the Southern District of Florida, Positron Corporation, Patrick Rooney, and John Rooney, engaged in market manipulation fraud in which they made an inducement payment to a stock promoter who would purchase shares of Positron in the open market ahead of planned press releases to help them manipulate the stock. The SEC alleges that the scheme was designed to generate the appearance of market activity in the company’s stock to induce investors to purchase the stock and artificially increase the trading price and volume.

The SEC’s complaint alleges that the defendants violated Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and 10b-5(c). The SEC is seeking permanent injunctions and civil money penalties against all three defendants, as well as penny stock bars against both Patrick and John Rooney and an officer-and-director bar against Patrick Rooney.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

SEC Charges Eight for Roles in Widespread Pump-and-Dump Scheme Involving California-Based Microcap Company

The Securities and Exchange Commission recently charged a ring of eight individuals for their roles in an alleged pump-and-dump scheme involving a penny stock company based in California that has repeatedly changed its name and purported line of business over the past several years.

The SEC alleges that the scheme was orchestrated by Izak Zirk de Maison, who was named Izak Zirk Engelbrecht before taking the surname of his wife Angelique de Maison. Both de Maisons are charged by the SEC in the case along with others enlisted to buy, sell, or promote stock in the company now called Gepco Ltd. Zirk de Maison installed some of these associates as officers and directors of Gepco while he secretly ran the company behind the scenes. Collectively, they amassed large blocks of shares of Gepco common stock while the de Maisons manipulated the market to create the appearance of genuine investor demand, allowing an associate to sell his stock at inflated prices to make hundreds of thousands of dollars in illicit profits.

In a parallel action, the U.S. Attorney’s Office for the Northern District of Ohio and the Cleveland Division of the Federal Bureau of Investigation today announced criminal charges against Zirk de Maison.

The SEC has obtained an emergency court order to freeze the assets of the de Maisons and others who profited illegally through the alleged scheme.

According to the SEC’s complaint filed in U.S. District Court for the Southern District of New York, Zirk de Maison has secretly controlled the shell company now known as Gepco since its incorporation in 2008 under a different name. During the next five years, he caused the company to enter into a number of reverse mergers and its reported business evolved from equipment leasing to prepaid stored value cards related to electronic devices until the company eventually became known as WikiFamilies and claimed to own and operate a social media website. The company name changed to Gepco in 2013, and after a failed attempt to merge it into a private mixed martial arts company, de Maison created his own private company purportedly in the high-end diamond business and merged Gepco into it.

The SEC alleges that the de Maisons, who reside in Redlands, Calif., brought at least six others into the fold to coordinate various components of the scheme. They each are charged in the SEC’s complaint:

• Jason Cope of Gates Mills, Ohio, is a longtime associate of Zirk de Maison and has a past record of securities fraud with a court judgment against him in a previous SEC enforcement action. On Cope’s behalf, Louis Mastromatteo of Bay Village, Ohio, allegedly dumped more than 2.5 million shares of Gepco stock through a nominee into the public market for hundreds of thousands of dollars in illicit profits that were kicked back to Cope.
• Trish Malone, who lives in Santee, Calif., serves as Gepco’s president, CFO, and secretary. She allegedly used Gepco to issue stock to Zirk de Maison and others so that they could conduct two unregistered and illegal distributions of the securities.
• Peter Voutsas, who lives in Santa Monica, Calif., and owns a jewelry store in Beverly Hills, serves as Gepco’s CEO and chief investment officer even though Zirk de Maison runs the company behind the scenes. Along with Angelique de Maison, Voutsas allegedly made a materially misleading statement about Gepco to the public while the de Maisons manipulated the market for Gepco’s stock.
• Ronald Loshin of San Anselmo, Calif., served as Gepco’s chief creative officer and allegedly failed to make required regulatory filings to report his transactions in Gepco stock as an insider. Furthermore, Loshin enabled de Maison to deceptively hide his own trading by allowing him to use a brokerage account held in Loshin’s name.
• Kieran Kuhn of Port Washington, N.Y., allegedly promoted Gepco stock through his firm Small Cap Resource Corp. and inflated the stock value to help the scheme succeed. He then conducted one of the unregistered and illegal distributions of Gepco-related securities for Zirk de Maison’s benefit.

According to the SEC’s complaint, Zirk de Maison exchanged e-mails and text messages with many of his co-conspirators as they openly discussed coordinating their promotional activities and manipulative trading in Gepco’s stock in order to create a false impression of market activity. They stood to earn exponentially more illicit profits given that they continue to beneficially own tens of millions of shares of Gepco stock, so the SEC suspended trading in Gepco securities in order to prevent any further manipulation or dumping of the stock.

The SEC’s complaint, which additionally charges several companies connected to the scheme, alleges violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Sections 9 and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The complaint seeks a permanent injunction and disgorgement of ill-gotten gains along with prejudgment interest, financial penalties, and penny stock bars. The SEC also seeks officer-and-director bars against the de Maisons and Malone.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

Securities and Exchange Commission v. BIH Corporation, et al., Civil Action No. 2:10-CV-577-FTM-29DNF (M.D. FL)

Jury Finds Orchestrator of Microcap Stock Pump-And-Dump Scheme Liable in SEC Enforcement Case

A federal court jury in Fort Myers, Fla., returned a unanimous verdict on August 8 finding Edward W. Hayter of Brooklyn, N.Y., liable for five counts of violating the federal securities laws in connection with a scheme to pump up the stock of a microcap corporation purportedly headquartered in Fort Myers in which Hayter profited by approximately $500,000. Hayter was the lone remaining defendant in the SEC’s enforcement case filed in 2010.

Evidence at the trial showed that among other things, press releases that Hayter and BIH issued in 2008 and 2009 falsely claimed BIH was purchasing a restaurant services corporation that purportedly had contracts with such major corporations as Citi Field and Applebee’s Restaurants. Other evidence showed that in order to hide his involvement in the scheme, Hayter and others created a fictitious businessman named Cris Galo who was allegedly an accomplished entrepreneur running BIH. Evidence showed all of BIH’s contact information traced back to Hayter and an associate in New York, with the Fort Myers office being only a mail drop. Trading records showed the false press releases contributed to BIH’s stock rising more than 2,700 percent in a matter of months, allowing colleagues of Hayter to sell stock and funnel approximately $500,000 in proceeds to his own corporations.

The SEC filed its complaint against Hayter, BIH, Wayne A. Burmaster Jr. on Sept. 20, 2010, alleging that they had engaged in fraud and illegal sales of securities. The SEC also alleged securities registration violations by Christopher L. Astrom and his company Bimini Reef Real Estate Inc., Damian B. Guthrie and his company Riverview Capital Inc., and Burmaster’s company North Bay South Corporation. The SEC named Baron International Inc., Beaver Creek Financial Corporation, and The Caddo Corporation as relief defendants.

According to the SEC’s complaint, Burmaster and Hayter released false information about BIH’s operations and business relationships, the company’s stock and dividend payments, and the identity of the individuals directing BIH’s affairs. The SEC alleged that as part of the scheme, Burmaster and Hayter illegally distributed BIH’s stock to North Bay, Bimini Reef, and Riverview, and those entities then dumped more than $1 million of BIH’s stock and divided illegally obtained sales proceeds among the defendants and relief defendants.

On Oct. 25, 2010, the Honorable John E. Steele, United States District Court Judge for the Middle District of Florida, entered judgments of permanent injunction and other relief against Astrom and Bimini Reef Real Estate as well as Guthrie and Riverview Capital, enjoining them from violating Sections 5(a) and 5(c) of the Securities Act of 1933. In addition to injunctive relief, the judgments order them to pay disgorgement, prejudgment interest, and penalties in amounts to be determined at a later date. Astrom and Guthrie are barred from participating in the offering of any penny stock. They consented to the entry of the judgments without admitting or denying the allegations in the complaint.

On Sept. 26, 2012, the court entered a default judgment against BIH and North Bay South Corporation and relief defendants The Caddo Corporation and Beaver Creek Financial, ordering disgorgement with a penalty against BIH and North Bay South Corporation to be determined at a later date. On Dec. 17, 2012, the court entered a default judgment against Baron International.

On July 14, 2014, the court entered a default judgment of permanent injunction and other relief against Burmaster, enjoining him from violating Sections 5(a), 5(c) and 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act and Rule 10b-5. In addition to injunctive relief, the judgment orders Burmaster to pay, jointly and severally, disgorgement and prejudgment interest of $1,349,158 and a penalty in an amount to be determined at a later date. Burmaster is barred from participating in the offering of any penny stock.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

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 recently 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.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

SEC Announces Charges in Scheme to Secretly Enable Lawbreakers to Run Microcap Company

The Securities and Exchange Commission recently announced fraud charges against four individuals and a microcap company for concealing from investors that two lawbreakers ran the company.

According to the SEC’s orders instituting administrative proceedings, the mission of Natural Blue Resources Inc. was to create, acquire, or otherwise invest in environmentally-friendly companies, including an initiative to locate, purify, and sell water recovered from underground aquifers in New Mexico and other areas with depleting water resources. What investors didn’t know was that two individuals with prior law violations – James E. Cohen and Joseph Corazzi – secretly controlled the operational and management decisions of Natural Blue while calling themselves outside “consultants.” This arrangement enabled them to be de facto officers of Natural Blue and personally profit from the company without disclosing their past brushes with the law to investors. Cohen, who lives in Windermere, Fla., was previously incarcerated for financial fraud. Corazzi, who resides in Albuquerque, N.M., was previously charged with violating federal securities laws and permanently barred from acting as an officer or director of a public company.

The SEC has suspended trading in Natural Blue stock. The other two individuals charged in the case are Toney Anaya and Erik Perry, who were former chief executive officers at Natural Blue. The SEC’s orders find that they misled investors by failing to disclose that Cohen and Corazzi were running the company in spite of their criminal or disciplinary histories.

Anaya, who is a former New Mexico governor and attorney general, and Perry each agreed to settle the charges. Anaya has cooperated extensively with the SEC’s investigation.

According to the SEC’s orders, Cohen and Corazzi created Natural Blue so they and other entities they controlled could receive money and stock from the company and profit by hundreds of thousands of dollars. While Natural Blue was ostensibly led by Anaya and subsequently Perry, management decisions made by Cohen and Corazzi resulted in no revenues or viable business operations for the company. Anaya and Perry each deferred to Cohen and Corazzi in derogation of their responsibilities. Natural Blue and Perry also made various material misrepresentations about the company, its contracts, and its anticipated revenue in a February 2011 press release as well as on a website and verbally to investors.

Anaya, who served as Natural Blue’s CEO from August 2009 to January 2011, has signed a cooperation agreement with the SEC in which he has consented to the entry of a cease-and-desist order without admitting or denying the charges. He will be barred from participating in any offering of a penny stock for at least five years. Any financial penalties will be determined at a later date.

Perry, who replaced Anaya and served as CEO until June 2011, agreed to settle the case by consenting to the entry of a cease-and-desist order without admitting or denying the charges. Perry, who previously resided in Massachusetts and currently lives in Bulgaria, agreed to pay a $150,000 penalty and be permanently barred from serving as an officer or director of a public company and from participating in any offerings of penny stock.

The SEC’s orders charge Natural Blue, Cohen, and Corazzi with violations of Section 17(a)(1) and (a)(3) of the Securities Act of 1933 as well as Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and 10b-5(c). The orders also charge Natural Blue with violations of Section 17(a)(2) for misrepresentations made to investors in press releases and public filings, and violations of Section 15(d) of the Exchange Act and Rules 15d-1 and 15d-13 by failing to make required SEC filings.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

The monthly disciplinary information is referenced on the FINRA site generally in alphabetical order. This post relates to the following company or individuals. If the reader would like to review the entire FINRA release or the broker-check information concerning this matter, you can follow these highlighted links:

June 2014 Disciplinary and Other FINRA Actions

Broker Check: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/

World Trade Financial Corporation (San Diego, California), Jason Troy Adams (La Mesa, California), Frank Edward Brickell (Encinitas, California) and Rodney Preston Michel (San Diego, California). The firm was fined a total of $45,000 and is prohibited from receiving and selling unregistered securities until it obtains an independent consultant to review its procedures. Adams was fined $20,000 and suspended from association with any FINRA member in any principal capacity for 30 business days. Brickell was fined $15,000 and suspended from association with any FINRA member in any capacity for 30 business days. Michel was fined $30,000 and suspended from association with any FINRA member in any principal capacity for 45 days.

The sanctions were based on findings that the firm and Brickell sold unregistered shares of an entity’s security using interstate means, without a registration statement in effect or filed with the SEC. The findings stated that the firm sold 2.3 million shares of a thinly traded penny stock on behalf of customers who held accounts with the firm. (Case # 2005000075703). To review the full release, please follow the above highlighted link.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

The Securities and Exchange Commission recently announced the latest in a series of cases against microcap companies, officers, and promoters arising out of a joint law enforcement investigation to unearth penny stock schemes with roots in South Florida.

In complaints filed in federal court in Miami, the SEC charged five penny stock promoters with conducting various manipulation schemes involving undisclosed payments to induce purchases of a microcap stock to generate the false appearance of market interest. The SEC also charged a Massachusetts-based microcap company and the CEO with orchestrating a pair of illicit kickback schemes and an insider trading scheme involving the company’s stock. A stock promoter in Texas is charged for his role in the insider trading scheme.

The SEC has now charged 48 individuals and 25 companies in this series of penny stock investigations out of the agency’s Miami Regional Office, which has worked closely with the U.S. Attorney’s Office for the Southern District of Florida and the Federal Bureau of Investigation. The first of the joint enforcement actions was announced in October 2010.

The U.S. Attorney’s Office for the Southern District of Florida today announced criminal charges against many of the same individuals charged today by the SEC.

According to the SEC’s complaint against Boca Raton, Fla.-based stock promoters Kevin McKnight and Stephen C. Bauer, they engaged in market manipulation fraud involving the penny stock of Environmental Infrastructure Holdings Corp. (EIHC). They generated the appearance of market interest in EIHC to induce investors to purchase the stock and artificially increase the trading price and volume. In a separate complaint against Jeffrey M. Berkowitz of Jupiter, Fla., the SEC alleges that he participated in a market manipulation scheme involving the stock of Face Up Entertainment Group (FUEG) and similarly worked to falsely generate the appearance of market interest in that stock. The SEC’s complaint against Eric S. Brown of Brooklyn, N.Y., alleges that he engaged in a pair of market manipulation schemes involving the stock of International Development & Environmental Holdings Corp. (IDEH) and DAM Holdings Inc. (DAMH), the latter of which is now known as Premier Beverage Group Corp. (PBGC). And according to an SEC complaint against Boca Raton, Fla.-based stock promoter Richard A. Altomare, he engaged in market manipulation scheme involving the stock of Sunset Brands Inc. (SSBN).

The SEC alleges in a separate complaint that North Andover, Mass.-based Urban AG Corp. (AQUM) and its president and CEO Billy V. Ray Jr. of Cumming, Ga., schemed to make an undisclosed kickback payment to a hedge fund manager in exchange for the fund’s purchase of restricted shares of stock in the company. In a separate kickback scheme, Ray made an inducement payment to a stock promoter who would purchase shares of Urban on the open market ahead of planned press releases to help him manipulate the stock. Meanwhile, stock promoter Wade Clark participated in Ray’s insider trading scheme involving Urban stock by providing the hedge fund fiduciary with an advance copy of a press release containing material nonpublic information about the company so the hedge fund manager would purchase stock prior to the news being issued.

The SEC’s complaints allege that Altomare, Bauer, Berkowitz, Brown, Clark, McKnight, Ray, and Urban AG Corp. violated Section 17(a)(1) of the Securities Act of 1933 and/or Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and 10b-5(c). The SEC is seeking financial penalties, disgorgement of ill-gotten gains plus prejudgment interest, and permanent injunctions. The SEC also seeks penny stock bars against all of the individuals charged in these cases as well as an officer-and-director bar against Ray.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

Curt Kramer and his firms Mazuma Corporation, Mazuma Funding Corporation, and Mazuma Holding Corporation agreed to disgorge those profits in paying a total of $1.4 million to settle the SEC’s charges.

An SEC investigation found that Kramer and his firms obtained unregistered shares in penny stock issuers Laidlaw Energy Group and Bederra Corporation. For the Laidlaw transactions, they claimed to rely on an exemption in Rule 504 of Regulation D that permits certain companies to offer and sell up to $1 million in unregistered shares. However, the Mazuma firms’ purchases of Laidlaw shares exceeded Rule 504’s $1 million limit, so the shares were restricted and not exempt from the registration requirements of the securities laws when they were re-sold. Mazuma Holding Corporation’s acquisition and sale of more than one billion unregistered shares of Bederra that had been misappropriated from the issuer by its transfer agent also were not exempt from registration.

According to the SEC’s order instituting settled administrative proceedings, Kramer and his firms purchased two billion Laidlaw shares, which amounted to 80 percent of Laidlaw’s outstanding shares at the time. They purchased these shares at a significant discount from prevailing market prices, making it highly likely they could immediately re-sell them publicly for a short-term profit. Kramer and his firms purchased the shares in 35 tranches with no six-month gaps, thus quantifying the transactions as a single, integrated offering through which Laidlaw exceeded the $1 million limit under Rule 504 by raising a total of $1,259,550. No registration statement was filed for any shares that Laidlaw offered and sold to Kramer and his firms, nor was any registration statement filed for any shares that Kramer and his firms subsequently re-sold into the public market. Despite exceeding the $1 million limit, Kramer and his firms continued to acquire and sell additional Laidlaw shares and profited by $126,963 from these transactions.

According to the SEC’s order, Kramer and Mazuma Holding Corporation acquired more than one billion shares of Bederra in 2009 and 2010 through 21 separate transactions from the principal of Bederra’s transfer agent, who had misappropriated the Bederra share certificates. Again they purchased the shares at a significant discount from prevailing market prices. Kramer and Mazuma Holding Corporation re-sold the misappropriated Bederra shares to the public without any registration statement for a profit of $934,404.

In the settlement, Kramer and his Great Neck, N.Y.-based Mazuma firms agreed to pay disgorgement totaling $1,061,367 plus prejudgment interest of $128,611 and penalties totaling $273,000. Without admitting or denying the SEC’s findings, Kramer and Mazuma consented to the entry of an order finding that they violated Sections 5(a) and 5(c) of the Securities Act of 1933. The order requires them to cease and desist from committing violations of Sections 5(a) and 5(c) and not participate in any Rule 504 offerings. Entry of the order will constitute a disqualifying event for Kramer and the Mazuma firms under the recently enacted bad actor disqualification provisions of Rule 506.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

The Securities and Exchange Commission (Commission) Obtains Final Judgment against Defendants Charged with Perpetrating $35 Million International Boiler Room Scheme

Recnetly, the Commission announced that the United States District Court for the Central District of California entered a final, settled judgment against defendants Nicholas Louis Geranio, The Good One, Inc., and Kaleidoscope Real Estate, Inc. for their roles in a $35 million scheme to manipulate the market and to profit from the issuance and sale of certain U.S. companies’ stock through offshore boiler rooms.

Pursuant to the judgment issued on November 1, 2013, the court ordered Geranio, The Good One and Kaleidoscope jointly and severally to pay disgorgement of $2,135,000, prejudgment interest thereon of $427,270, and a civil penalty of $500,000, barred them from participating in any offering of penny stock, and permanently enjoined them from violations of the antifraud provisions of the federal securities laws. The judgment also barred Geranio from acting as an officer or director of any public company and ordered him to pay an additional $279,000 in disgorgement plus prejudgment interest thereon of $55,835, representing monies received by another defendant, Keith Field, provided that the SEC shall not obtain double recovery from Geranio and Field. Finally, the judgment ordered relief defendant BWRE Hawaii, LLC to pay, jointly and severally with Geranio, The Good One, and Kaleidoscope, an additional $240,000 in disgorgement plus prejudgment interest thereon of $55,295.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

The Securities and Exchange Commission recently announced the issuance of an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions (Order) against John Micciola (Micciola), a resident of Freehold, New Jersey. The Order finds that, on August 8, 2011, Micciola was convicted in the Supreme Court of the State of New York in People of the State of New York v. Joseph Stevens & Co., Inc., et al., Case Number 02394-2009 of two counts of securities fraud, one count of grand larceny in the second degree, and one count of grand larceny in the third degree. The Order further finds that Micciola participated in firm-wide schemes that resulted in excessive and undisclosed commissions on stocks.

Based on the above, the Order bars Micciola from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization and from participating in any offering of a penny stock, including acting as a promoter, finder, consultant, agent or other person who engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock, or inducing or attempting to induce the purchase or sale of any penny stock. Micciola consented to the issuance of the Order.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

The Securities and Exchange Commission recently charged the operators of a South Florida-based boiler room scheme with defrauding seniors and other investors they pressured into purchasing stock in a company that purportedly developed ground-breaking technology for the National Football League to use in the Super Bowl.

The SEC alleges that Peter Kirschner of Delray Beach, Fla. and his business partner Stuart Rubens of North Miami struck an agreement with Thought Development Inc. (TDI) to solicit investors and sell unregistered company stock to help the Miami Beach-based company raise capital. TDI states that its signature invention is a laser-line system that generates a green line on a football field that is visible as a first-down marker not only on television, but also within the stadium to players, fans, and officials. TDI claims its technology would decrease the time needed by officials to determine first downs and generate more time to be sold to television advertisers.

The SEC alleges that through sales agents paid by their company Premiere Consulting, Kirschner and Rubens schemed to misrepresent to investors that their money would be used to develop TDI’s technology and fund a purported IPO of its stock. Instead, 75 percent of the offering proceeds were retained by Premiere Consulting or paid to sales agents through undisclosed commissions and fees. Investors also were falsely promised that TDI’s laser-line technology would be used during NFL games, and one individual invested an additional $75,000 because a sales agent lied and said that NFL Commissioner Roger Goodell purchased the technology for use in the 2013 Super Bowl. TDI did not have any agreements with the NFL or any team to feature its technology during football games, let alone at the Super Bowl.

Kirschner has a prior history of securities law violations. In 2006, he was charged by the SEC for fraudulent sales of prematurely issued stock dividend shares and agreed to pay nearly $165,000 to settle the charges. Kirschner and Rubens agreed to settle these latest SEC charges. They will be barred from participating in any penny stock offerings, and monetary sanctions against them will be determined by the court at a later date.

According to the SEC’s complaint filed in U.S. District Court for the Southern District of Florida, TDI terminated its relationship with Premiere Consulting, Kirschner, and Rubens in late 2011 when it found out about the lies being told to investors and the undisclosed commissions and other fees. However, Kirschner and Rubens then expanded their scheme by forming a new company Advanced Equity Partners and continuing to solicit investors and sell purported TDI stock. They generated false trade documents to dupe investors into believing they had purchased TDI shares when in fact they had not. Kirschner and Rubens took nearly all investor funds for personal use and payments to sales agents.

According to the SEC’s complaint, Premiere Consulting and Advanced Equity raised more than $2.4 million from approximately 200 investors nationwide from July 2011 to November 2012. Kirschner, Rubens, and their companies failed to disclose to investors that they retained or paid sales agents through commissions and fees that comprised a significant chunk of the money raised from investors. For example, Advanced Equity sales agents lied to a 79-year-old retiree living on a fixed income by telling him they would only take a commission if he resold the stock for a profit in the future. In reality, Advanced Equity, Kirschner, and Rubens immediately paid their sales agents $15,000 of the $27,000 that he invested, and kept the rest of the money in their own accounts.

The SEC alleges that investors were falsely promised that TDI was about to go public when Kirschner and Rubens knew that TDI had not taken any of the required steps. They falsely promised guaranteed returns to investors when they had no basis to do so. For example, Rubens directly solicited a 77-year-old retiree to invest in TDI in February 2012. After the retiree declined to invest, Rubens and his sales agents engaged in high-pressure sales tactics and further enticed him with false promises about “guaranteed returns.” Advanced Equity later sent the retiree a false trade confirmation letter to deceive him into believing he had purchased $100,000 worth of TDI shares when, in fact, he had not. Ultimately, the retiree relented to the pressure and invested $25,000.

The SEC’s complaint charges Advanced Equity, Premiere Consulting, Kirschner, and Rubens with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5. They are settling the charges without admitting or denying the allegations.

The SEC separately filed a complaint in federal court against TDI and its chairman Alan Amron to charge them with securities registration violations. The federal securities laws require all issuances of common stock to be registered with the SEC or meet a legal exemption from registration, and the complaint alleges that they enabled the unregistered solicitation of investors in their original agreement with Kirschner and Rubens. TDI and Amron agreed to settle the charges without admitting or denying the allegations, and Amron agreed to pay a $10,000 penalty.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

The Securities and Exchange Commission (“Commission”) recently announced that it charged two microcap companies, their CEOs, and one penny stock promoter for spearheading illegal kickback schemes. The Commission also charged two other microcap companies, their CEOs, and four other promoters with arranging the payment of bribes to hype the companies in which they had a stake in order to create a false sense of market activity and illegally generate stock sales.

The Commission’s complaints recently filed in U.S. District Court for the Southern District of Florida charged the following penny stock companies and officers:

• Health Sciences Group (HESG) formerly based in Indian Harbour, Fla., and now based in Newport Beach, Calif.
  • President and CEO Thomas Gaffney of Satellite Beach, Fla.
• Nationwide Pharmassist Corp. based in Boca Raton, Fla.
  • CEO and Chairman Stephen F. Molinari of Boca Raton, Fla.
• Redfin Network (RFNN) based in Fort Lauderdale, Fla.
  • President and CEO Jeffrey L. Schultz of Fort Lauderdale, Fla.
• VHGI Holdings (VHGI) based in Fort Worth, Texas
  • CEO Douglas P. Martin of Wellington, Fla.

The SEC’s complaints charge the following penny stock promoters:

• Mark Balbirer of Pompano Beach, Fla.
• Jack Freedman of Fort Lauderdale, Fla.
• Richard P. Greene of Davie, Fla.
• Peter Santamaria of Coconut Creek, Fla.
• Sheldon R. Simon of Palm Beach Gardens, Fla.

According to the Commission’s complaints, one of the schemes (Health Sciences Group/Gaffney) involved an arrangement to pay an undisclosed kickback to a pension fund manager in exchange for the fund’s purchase of restricted shares of stock in the company. Two other schemes (Nationwide PharmAssist/Molinari and Balbirer) involved agreements to pay undisclosed kickbacks to hedge fund principals in return for their funds’ purchase of restricted shares.

The Commission’s complaints allege that other schemes involved the arrangement of inducement payments by officers or promoters of penny stock companies to coordinate the manipulation of their stock. Those who arranged the payment of bribes to create fictitious market movement were Redfin Network/Schultz, VHGI/Martin, and promoters Greene, Santamaria, and Simon. In his scheme, Freedman arranged to pay an undisclosed bribe to a stockbroker who agreed to purchase a microcap company’s stock in the open market for his customers’ discretionary accounts.

The SEC’s complaints allege that the companies, officers, and promoters violated Section 17(a)(1) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and/or 10b-5(c). The SEC seeks financial penalties, disgorgement of ill-gotten gains plus prejudgment interest, and permanent injunctions. The SEC also seeks penny stock bars against each of the officers and promoters, and officer-and-director bars against Gaffney, Martin, Molinari, and Schultz.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.