Is this the same Kenneth Kurtz from SCRO?
ragingbull.lycos.com
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SEC SUES NINE INDIVIDUALS, INCLUDING LAS VEGAS LAWYER AND TRADER AT UTAH
MARKET-MAKING FIRM, IN $3.7 MILLION PUMP-AND-DUMP SCHEME
The Commission announced today that it filed a complaint in the federal
District Court for the Southern District of New York against: Max C.
Tanner, a Las Vegas attorney; Kevin Kirkpatrick, a trader at Olsen Payne &
Co., a Utah-based market-making firm; Kevin J. Ruggiero and Michael Boston,
both of whom were brokers associated with Baxter, Banks, & Smith (BBS), a
now defunct broker-dealer; Alex Sheyfer and Alexander Zalmenenko, both of
whom were unlicensed brokers also associated with BBS; and several stock
promoters, including Dennis Evans, a resident of Las Vegas, Nevada, Mark A.
Taylor, Sr., a resident of Tampa, Florida, and Kenneth Kurtz, a resident of
Salt Lake City, Utah.
The Commission's complaint alleges that from March 1998 through June 1999,
the Defendants engaged in a pump and dump scheme involving the stock of
Maid Aide, Inc. (MDAN), a shell company trading on the Over-the- Counter
Bulletin Board (OTC-BB). The complaint alleges that as a result of this
scheme, MDAN traded at artificially inflated prices ranging between $5.00
and $9.35 per share, allowing the Defendants to dump more than 475,000 MDAN
shares into the market for proceeds of over $3.7 million. In addition, the
complaint alleges the following:
* Although MDAN purported to be a commercial and residential cleaning
services company, it was actually nothing more than a publicly trading
shell corporation controlled by Tanner and Evans. Tanner and Evans
controlled at least 90% of MDAN's public float. In early 1998, Tanner
entered into an agreement with Taylor, Kurtz, and Ruggiero that entitled
Taylor, Kurtz, and Ruggiero to 125,000 MDAN shares each. Tanner, Taylor,
Kurtz, and Ruggiero agreed to set up boiler rooms that would sell these
shares to the public in exchange for undisclosed kickbacks paid from the
sale proceeds.
* On February 27, 1998, Tanner, Taylor, Kurtz, and Ruggiero issued a press
release announcing that MDAN intended to merge with CFE Trucking Inc., a
private company that was in the business of hauling gravel for use in
building and road construction. Shortly after the press release was issued,
two boiler rooms operating as BBS branch offices began cold calling
investors to tout MDAN. Boston supervised one of the BBS boiler rooms, and
Sheyfer and Zalmenenko supervised the other.
* The cold callers working in the boiler rooms made numerous material
misrepresentations to investors, including baseless predictions that MDAN's
stock price would double in six months. The cold callers also routinely
posed as Boston and Ruggiero in order to hide their identities and the fact
that they were not licensed brokers. The cold callers failed to inform
investors that they were being paid up to 70% of the proceeds from each
MDAN stock sale that they solicited. Boston, Ruggiero, Sheyfer, and
Zalmenenko were paid a portion of these kickbacks in exchange for
supervising the boiler rooms.
* To further the scheme, Kurtz and Ruggiero recruited Kirkpatrick, a trader
at Olsen Payne & Co. Kurtz and Ruggiero guaranteed that Kirkpatrick would
be allowed to profit on all of his MDAN trades if his firm made a market in
MDAN's securities. Kirkpatrick agreed, and Olsen Payne & Co. acted as
market maker for MDAN from March 1998 through June 1999. During this
period, Kirkpatrick posted artificial price quotations concerning MDAN's
stock on the OTC-BB and executed matched orders with other participants in
the scheme in order to create artificial rises in MDAN's stock price and
trading volume.
The Commission's complaint charges all of the defendants with violations of
the antifraud provisions of the federal securities laws, specifically
Section 17(a) of the Securities Act of 1933 (Securities Act), Section 10(b)
of the Securities Exchange Act of 1934 (Exchange Act), and Rule 10b-5
thereunder. In addition, the complaint charges Tanner, Evans, Taylor,
Ruggiero, and Boston with violations of Sections 5(a) and 5(c) of the
Securities Act and Sheyfer and Zalmenenko with violations of Sections 5(a)
and 5(c) of the Securities Act and Section 15(a) of the Exchange Act. The
Commission seeks injunctions prohibiting future violations of the
securities laws, disgorgement, and civil penalties. The Commission is also
seeking an order barring Tanner and Evans from serving as an officer or
director of any public company.
In addition to the Commission's civil action against Tanner, Evans,
Ruggiero, Taylor, and Kurtz, these individuals were indicted on September
19, 2000 for their role in the MDAN scheme by the Department of Justice,
Tax Division (DOJ). Tanner and Evans were found guilty in the criminal
action on November 19, 2001. Ruggiero, Taylor, and Kurtz had previously
entered guilty pleas in connection with the criminal action. The Commission
acknowledges the assistance of the DOJ, the U.S. Attorney's Office for the
Southern District of New York, the FBI, NASD Regulation, Inc., and the
British Columbia Securities Commission in connection with this matter. [SEC
v. Max C. Tanner, Inc., et al., 02 CV 0306 (SDNY, WHP] (LR-17305) |
