Securities and Exchange Commission v. Diane J. Harrison, et al., Civil Action No. 18-cv-01003 (M.D. Fla., filed April 25, 2018)
The Securities and Exchange Commission recently announced that it filed a civil injunctive action on April 25, 2018, against a lawyer and two other individuals relating to two microcap schemes involving undisclosed “blank check” companies. In separate, settled administrative proceedings, the SEC charged another individual and two public companies related to one of the schemes.
The SEC’s complaint alleges that attorney Diane J. Harrison, Esq. and her husband, Michael J. Daniels, both of Palmetto, Florida, manufactured at least five microcap issuers with the undisclosed intent to sell them based on their status as public companies with purportedly unrestricted shares available for resale in the public markets. According to the complaint, Daniels and Harrison created the false appearance that the companies were pursuing specific business plans with independent management and shareholders by installing friends and family (including defendant Catherine A. Bradaick-Zolla of Sarasota, Florida, who also provided other assistance to the fraud) as purported officers and shareholders. The SEC alleges that, in reality, Daniels and Harrison controlled the shares. According to the complaint, Daniels and Harrison sold four of the five companies to Andy Z. Fan of Las Vegas, Nevada and, along with Bradaick-Zolla, continued to provide support to Fan. For example, the SEC alleges that Daniels, Harrison, and Bradaick-Zolla prepared false SEC filings, Harrison submitted false legal opinion letters, and Daniels and Bradaick-Zolla entered manipulative trades to artificially set the price of the stocks in the public market. The SEC previously issued a stop order on the public offering of the fifth company in Daniels and Harrison’s pipeline.