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   Strategies & Market TrendsAnthony @ Equity Investigations, Dear Anthony,

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From: StockDung5/12/2010 11:43:05 AM
   of 122081
Prospectus - SEDONA CORP - 12-20-1999... Inc. Wayne Saker Keren MYCB Elias, Inc. Leonard J. Adams The Jerusalem ..... Promissory Note Up To $500000.00 Line Of Credit - SEDONA CORP - 4-15-1999 ...



LITIGATION RELEASE NO. 21521 / May 11, 2010
SEC v. Leonard J. Adams, Civ. Action No. 1:10-cv-10799


The Securities and Exchange Commission announced today that it filed a settled civil action against Leonard J. Adams for committing multiple violations of Rule 105 of Regulation M. The complaint, filed in the United States District Court for the District of Massachusetts, alleges that Adams violated Rule 105 in connection with at least 94 offerings between March 2006 and December 2008, resulting in ill-gotten gains of $331,387. Without admitting or denying the allegation of the complaint, Adams agreed to pay a civil money penalty in the amount of $165,693.

Rule 105 helps prevent abusive short selling and market manipulation by ensuring that offering prices are set by natural forces of supply and demand for the securities in a secondary offering rather than by manipulative activity. Short selling ahead of offerings can reduce the proceeds received by public companies and their shareholders by artificially depressing the market price shortly before the company prices its offering. The SEC amended Rule 105 effective October 2007 to prevent this trading practice known as “shorting into the deal.” The revised rule generally prohibits the purchase of offering shares by any person who sold short the same securities within five business days before the pricing of the offering.

The Commission today also instituted settled cease-and-desist proceedings against Adams concerning the same conduct. In connection with these proceedings, Adams, without admitting or denying the Commission’s findings, agreed to an order requiring him to cease and desist from committing or causing any violations and any future violations of Rule 105 of Regulation M under the Securities Exchange Act of 1934 and to pay disgorgement of $331,387 and prejudgment interest in the amount of $16,613 (to be paid in four quarterly installments of $87,000).

See Also: SEC Complaint


Last modified: 5/11/2010
Contact | Employment | Links | FOIA | Forms | Privacy

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From: StockDung5/12/2010 12:10:05 PM
   of 122081
SEDONA CORP - SDNA Securities Registration Statement (simplified ...SEDONA CORP Securities Registration Statement (simplified form) (S-3/A) BENEFICIAL OWNERS.

Broad Capital Associates, 2,100,000 (50) 2,100,000 0 *
Inc. (49)

49) Broad Capital Associates, Inc. has provided certain consulting services to
the Company.



Litigation Release No. 15826 / July 30, 1998

BODNER, Civil Action No. CV 98-6142 DDP (MCx)(C.D. Cal.)

On July 30, 1998, the Commission announced that it filed
various legal proceedings against Incomnet, Inc., a publicly held
corporation headquartered in Woodland Hills, California, and
three of its former officers and directors for their roles in a
series of fraudulent schemes in violation of the federal
securities laws. The Commission also charged Broad Capital
Associates, Inc. and Broad Capital's owners with violations of
the securities registration and reporting provisions of the
federal securities laws.

The proceedings brought by the Commission include a lawsuit
filed in federal court in Los Angeles against Sam D. Schwartz,
Incomnet's former President and Chairman of the Board, Broad
Capital, and Broad Capital's owners, Murray A. Huberfeld and
David B. Bodner. Schwartz, who is 58 years old and a resident of
Encino, California, is charged with securities fraud for causing
Incomnet to file false forms with the Commission and issue false
press releases. Schwartz is also charged with using a nominee
account to personally trade in Incomnet securities and for
failing to disclose this trading as required by the federal
securities laws.

Specifically, the Complaint alleges that on August 28, 1995,
Schwartz caused Incomnet to file a Form 8-K with the Commission
which falsely stated that Schwartz had received prior written
approval and consent from Incomnet's Board of Directors to
establish a personal account to trade in Incomnet's stock. The
Complaint further alleges that Schwartz caused Incomnet to issue
a false press release in September 1995 that repeated some of the
false statements in the Form 8-K and to file a Form 10-Q with the
Commission in November 1995 that referenced the false Form 8-K.
Finally, the Complaint alleges that in January 1995, Schwartz
caused Incomnet to issue two press releases falsely denying the
existence of the Commission's then-ongoing investigation of
Incomnet, even though Schwartz knew at that time of the
Commission's investigation.

The Complaint also alleges that from June 1994 through July
1995, Schwartz purchased, through a nominee account,
approximately 1,100,000 shares of Incomnet stock and sold
approximately 900,000 shares of Incomnet stock without timely
disclosing these transactions. The Complaint seeks to
permanently enjoin Schwartz from future violations of Sections
10(b), 13(a), 13(d), and 16(a) of the Securities Exchange Act of
1934 and Rules 10b-5, 12b-20, 13a-11, 13a-13, and 16a-3
thereunder. The Complaint also seeks a civil monetary penalty
from Schwartz.

The Complaint also charges Broad Capital, a private
investment firm based in New York City which acted as a
consultant to Incomnet, Huberfeld, age 37, and Bodner, age 41,
both residents of New York, with receiving over 513,000 shares of
restricted Incomnet stock from Joel W. Greenberg, a former
director of Incomnet, and immediately reselling these shares for
a profit of approximately $3,700,000 in violation of the
securities registration provisions of the federal securities
laws. Additionally, the Complaint alleges that Broad Capital
never disclosed that it held over 5% of Incomnet's outstanding
securities, as required by the reporting provisions of the
federal securities laws. Broad Capital, Huberfeld, and Bodner
agreed to settle this matter by consenting to a judgment, without
admitting or denying the allegations in the Commission's
Complaint, that enjoins them from committing future violations of
the securities registration and reporting provisions of the
federal securities laws. The judgment also orders Broad Capital,
Huberfeld, and Bodner, to disgorge their profits plus interest,
for a total of $4,694,125. Finally, the judgment orders Broad
Capital to pay a civil penalty of $50,000 and Huberfeld and
Bodner each to pay a civil penalty of $15,000.

The Commission also brought a cease-and-desist proceeding
against Incomnet, Greenberg, and Stephen A. Caswell, a former
officer and director of Incomnet. In this proceeding, the
Commission found that Incomnet violated the antifraud and
reporting provisions of the federal securities laws by filing
materially false forms with the Commission and by issuing several
false press releases, and that Greenberg and Caswell caused
Incomnet's violations of these provisions. The Commission also
found that Greenberg failed to disclose a loan arrangement he
entered into in January 1995 with Broad Capital in which he used
513,167 shares of Incomnet stock as collateral. Incomnet,
Greenberg, and Caswell all consented, without admitting or
denying the Commission's findings, to the entry of a cease-and-
desist order from violating or causing violations of the
antifraud and reporting provisions of the federal securities
STEPHEN A. CASWELL, Exchange Act Rel. No. 34-40281;
Administrative Proceeding File No. 3-9661.

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From: scion5/12/2010 12:28:27 PM
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Stanford's lawyer jailed for a night

Houston Chronicle
May 10, 2010, 10:25PM

Robert S. Bennett, one of the current lawyers for imprisoned businessman R. Allen Stanford, spent a night in jail himself last week.

Bennett was found in contempt Friday by County Civil Court at Law Judge Jacqueline Lucci Smith. The judge found Bennett repeatedly had refused to provide documents the court ordered be made available in a civil lawsuit against Bennett over sharing legal fees.

Smith ordered Bennett taken to the Harris County Jail Friday afternoon and set a $5,000 bail.

Bennett's lawyer R.P. “Skip” Cornelius, said Bennett's wife had the money, but because of a paperwork problem or miscommunication at the jail, Bennett was not released immediately and was in the jail overnight.

At a hearing Monday, Bennett produced what appeared to be the required documents, though the judge said she wants a follow-up affidavit from the accountant who provided some of the paperwork.

Bennett's client, Stanford, has denied any wrongdoing but faces 21 federal charges for what prosecutors allege is a $7 billion Ponzi scheme. A federal judge deemed Stanford a flight risk, and he remains behind bars awaiting a trial set for January.

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From: scion5/12/2010 1:13:05 PM
   of 122081
Testimony Concerning the Severe Market Disruption on May 6, 2010

by Mary L. Schapiro
U.S. Securities and Exchange Commission
Before the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises of the United States House of Representatives Committee on Financial Services
May 11, 2010

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From: scion5/12/2010 1:17:45 PM
   of 122081
Fraud Files: What the SEC Should Really Be Investigating About SpongeTech

Posted 9:00 AM 05/12/10

Last week, the Securities and Exchange Commission charged SpongeTech Delivery Systems (SPNG), which makes a soap-filled SpongeBob sponge, with masterminding a pump-and-dump scheme. The SEC also named five individuals -- including executives Michael Metter and Steven Moskowitz -- in the civil complaint, which was accompanied by a criminal charge from the U.S. Attorney's Office for the Eastern District of New York.

The SEC claims the company made up customers and faked sales numbers, using fraudulent press releases and SEC filings to market the company's alleged success. These activities caused SpongeTech's stock price to rise, and the SEC says SpongeTech and its executives also flooded the market with unregistered shares of stock. When the investigation started, SpongeTech executives supposedly used phony documentation to try to substantiate its sales figures.

Reporters and bloggers grabbed their keyboards and started writing, calling the case a sign of a new, "tough" SEC. Hooray for the government finally paying attention to fraud and doing something about it, they said, suggesting SpongeTech might signal more enforcement cases to come. Market watchers also have been cheering about what they view as the SEC getting tough with Goldman Sachs (although I remain much more skeptical).

A Tiny Victory

The truth is that the SpongeTech case puts hardly a dent in the mountain of fraud that dishonest executives are committing every day. It's an interesting story and a case on which the SEC needed to act, based on the information it had. But it's way too small to be an indicator that the SEC is getting serious about corporate fraud.

To me, the real SpongeTech story is not the fact that the SEC is pursuing the company, but all the issuer retaliation that bubbled up when the company's problems were brought to light. Issuer retaliation is the special kind of revenge that public companies and their supporters exact on those who would dare to speak publicly about the wrongs they see, and this story is rife with it.

The victim is Kaja Whitehouse of the New York Post, who has been writing about SpongeTech since September 2009, when she reported the SEC's inquiry into SpongeTech's financials. She followed up with an article about attorney Joel Pensley, who said SpongeTech was fraudulently using his name on letters he hadn't written. Whitehouse then exposed the fact that five of the six largest customers SpongeTech cited in an SEC filing didn't appear to exist. The stories continued with SpongeTech's mounting legal woes, including lawsuits from Madison Square Garden, the New York Giants and CBS Radio.

SpongeTech Fires Back

And for her diligence, Whitehouse and her family were slammed with insults and accusations. Emails and message board postings have threatened "stock bashers" and their families with attacks. Whitehouse's personal information and photos have been posted on the Internet for the world to see.

While these attacks have never been linked directly to SpongeTech, the company has engaged in a bit of gameplay itself. In September, the company issued a press release, SpongeTech Delivery Systems, Inc. Sets The Record Straight, stating that press reports were inaccurate and based on forgeries. The company went even further in April, going after a critic at a competing company who questioned the company's sales figures and suing the New York Post, Whitehouse and several others.

Of course, I am well aware that this is only one of many examples of what the supporters of companies can do when someone attempts to ask serious questions about a business or expose red flags of fraud. One of the more colorful companies, when it comes to the smearing of critics, is (OSTK). The company's CEO Patrick Byrne has regularly retaliated against critics, not only with outrageous insults, but also with methods like cyberstalking and interfering in a divorce.

Felon-turned-corporate-watchdog Barry Minkow has been on the receiving end of attacks and lawsuits by companies he has criticized, as well. My colleagues and I (including Minkow) have been targeted in malicious anonymous attacks, and more recently, have been defending ourselves against a $270 million lawsuit from Medifast (MED).

Skeptics Wanted

I am not against the right of companies to defend themselves against false information and baseless attacks by critics, but I am against malicious personal attacks and lawsuits aimed at shutting down free speech. People have a right to ask questions about the financials and the dealings of public companies. If companies and executives don't want the public to scrutinize their activities, then they ought not be public companies.

If they are public, critics and supporters alike have a right to look at disclosures and public records and ask questions about them. Whitehouse was in the right: She was asking questions about things that didn't add up at SpongeTech. And apparently the SEC agrees with her.

In fact, the market needs critics to help examine public companies. Even if the SEC had the resources to conduct thorough investigations on a wide scale, its lack of competence means it would always be only marginally effective at reducing corporate fraud. Corporate executives have an inherent self-interest in inflating financials and engaging in positive public-relations campaigns. Public-company critics (including short sellers, fraud investigators, reporters and bloggers) help level the playing field and provide the skepticism and accountability necessary to keep those executives honest.

The SEC needs to take a serious look at issuer retaliation against those who ask questions and criticize public companies. The critics are providing a valuable public service and the SEC needs to take action to protect them from undeserved attacks by the public companies they're criticizing.

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From: StockDung5/12/2010 1:20:13 PM
   of 122081
Allen Stanford Yacht Sells for $3.25 Million in Online Auction
May 11, 2010, 12:04 AM EDT

May 11 (Bloomberg) -- Indicted financier R. Allen Stanford’s 112-foot yacht was sold for $3.25 million to an unidentified bidder following a two-month online auction, according to the Florida brokerage that handled the sale.

The Sea Eagle was listed for sale on March 11 by Ardell Yacht & Ship Brokers of Fort Lauderdale, with an opening bid of $2.5 million, over Stanford’s objections. His lawyers complained a court-appointed receiver is liquidating Stanford’s assets at “fire-sale” prices before the former billionaire has been found guilty of anything.

“Mr. Stanford invested over $16 million in renovating the Sea Eagle, stripping the vessel to its hull and rebuilding it into one of the finest sport fishing boats in the world,” Ruth Brewer Schuster, one of the financier’s civil lawyers, said in an October filling objecting to the auction. “Any failure to sell the Sea Eagle for an amount far and above Ardell’s asking price of $6.5 million will be a complete waste of estate assets.”

Stanford, who denies all wrongdoing, is in jail awaiting trial on 21 criminal charges that he defrauded investors of more than $7 billion through allegedly bogus certificates of deposit issued by Antigua-based Stanford International Bank Ltd. He faces parallel civil claims from the U.S. Securities and Exchange Commission. His criminal trial is set for January in Houston federal court.

A Steal

Stanford’s 12-year-old motor yacht attracted just two bidders beyond the initial “stalking horse” offer entered to start the bidding. Two hours before the auction ended yesterday, one bidder returned and raised his bid by $250,000 to win the Sea Eagle.

“That boat is definitely a steal at $3.25 million,” said Natalia Hortynski, Ardell’s marketing director. “We were hoping for more, because the more we get, the better it is for everybody.”

Although Florida’s yacht market is awash in bargain-priced boats, Hortynski said the Sea Eagle’s jet engines and a complete retrofitting undertaken by its Dutch manufacturer in 2005 made the craft “very unique.”

The boat was sold “as is, where is,” after it was brought to the U.S. from one of Stanford’s residences in the Caribbean, following the SEC’s suit and seizure of his assets in February 2009. Ralph Janvey, Stanford’s receiver, has been selling Stanford’s assets and investments to raise money to repay his creditors and investors.

Everything Included

In photographs of the yacht, one wall is dominated by a mirror etched with Stanford Financial Group’s stylized eagle shield logo. The boat’s oversized staterooms and marble-lined bathrooms are stocked with pillows, sheets and towels. A small dining table is set for two, and a mini-refrigerator on the upper deck is filled with beer.

Stanford’s lawyers had asked Janvey not to sell personal belongings the financier and his fiancée, Andrea Stoelker, left on the boat. In court papers, the couple requested the return of items such as several small sculptures, scuba gear, DVDs and table linens.

“They’re going with the boat,” Hortynski said of any personal items still onboard. “Everything that’s on the boat is included.”

The criminal case is U.S. v. Stanford, 09-cr-00342, U.S. District Court, Southern District of Texas (Houston). The civil case is SEC v. Stanford, 3:09-cv-00298, U.S. District Court, Northern District of Texas (Dallas).

--Editors: John Pickering, Michael Hytha.

To contact the reporter on this story: Laurel Brubaker Calkins in Houston at

To contact the editor responsible for this report: David E. Rovella at

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From: scion5/12/2010 2:04:06 PM
   of 122081
When Should a Company Disclose a Wells Notice?

May 12, 2010, 1:40 pm

Peter J. Henning follows issues involving securities law and white-collar crime for DealBook’s White Collar Watch.

Shares of Moody’s dropped precipitously after it disclosed that the Securities and Exchange Commission had sent out a Wells notice saying it might file charges against the company because of “false and misleading” statements in a 2008 regulatory filing. Even though the S.E.C. could still pull back from charging Moody’s, the mere report of a Wells notice is now enough to cause a strong negative reaction in the market.

Unlike Goldman Sachs, which did not disclose the Wells notice it received nine months before the S.E.C. filed a securities fraud complaint against the firm, Moody’s at least included the information in its 10-Q first-quarter report. But that was still seven weeks after being contacted by the S.E.C., raising once again the question of when a company should disclose the receipt of a Wells notice, and whether it is “material” to investors.

A Wells notice is given by the S.E.C.’s enforcement division when it is planning to recommend to the full commission that it authorize charges for a violation of the securities laws. Not every Wells notice results in litigation, and it is often viewed as an invitation to negotiate a settlement, which is how most S.E.C. cases are resolved.

The disclosure question related to potential litigation with the S.E.C. is left largely to corporate management to decide because the rules are quite vague on when such information is material, requiring a company to report it. Regulation S-K, Item 103, deals with disclosure of “legal proceedings,” and it requires a company to do the following:

Describe briefly any material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the registrant or any of its subsidiaries is a party or of which any of their property is the subject. Include the name of the court or agency in which the proceedings are pending, the date instituted, the principal parties thereto, a description of the factual basis alleged to underlie the proceeding and the relief sought. Include similar information as to any such proceedings known to be contemplated by governmental authorities.

An S.E.C. investigation is not a “pending legal proceeding,” and it is arguable that a Wells notice does not yet meet the standard for disclosure, although its clear threat of litigation brings it much closer to something that would be material to investors. The fact that the S.E.C. rule specifically identifies governmental litigation supports disclosing the Wells notice, but no company has even been found in violation of the disclosure rules for not doing so.

If a company concludes it should disclose a Wells notice, the next question is when it should release the information. Regulation S-K applies to quarterly and annual reports, which may not come out for weeks or even months after a company receives a Wells notice, as happened with Moody’s when it received the notice on March 18 and filed its 10-Q on May 7.

Companies often file a form 8-K to disclose important matters more quickly, but the rules for that form do not address litigation issues directly, so a potential suit would not have to be disclosed immediately. There is a catch-all provision on form 8-K for “other events” that a company considers important for investors even though it may not otherwise be required to disclose them. But this is discretionary, so it is a matter of choice for a company whether it believe investors should be notified earlier.

Unfortunately for Moody’s chief executive, Raymond W. McDaniel, he exercised options on 100,000 shares that he promptly sold on March 18, the day the company received the Wells notice. The delay in disclosing the information only served to fuel suspicions that his transactions took advantage of inside information, although they certainly appear to be unconnected because the sales were part of a pre-existing plan for Mr. McDaniel to engage in stock transactions aimed at avoiding the very problem of insider trading by corporate executives. But this shows how delicate the issue of disclosing a Wells notice is, and how early disclosure can diffuse speculation about whether an officer’s sale of stock is problematic.

The S.E.C.’s Wells notice concerned a possible misstatement by Moody’s in its application to become a nationally recognized statistical rating organization. It centered on problematic securities ratings in the company’s European operation. Unlike its civil lawsuit against Goldman, which was filed in federal court and involves claims of securities fraud, the S.E.C. said it might file an administrative cease-and-desist proceeding against Moody’s, which is not considered to be as great a threat to a company. But investors paid little attention to the details because the market is now so skittish about financial regulatory legislation and the problems faced by all the ratings agencies.

The timing of the Moody’s disclosure of the Wells notice raises questions about whether the company hoped to limit the impact of the information. The company filed its 10-Q on Friday afternoon after the close of trading, perhaps on the chance that other news would cause it to be overlooked, or at least allow investors a little extra time over the weekend to digest the information. In prior quarters, Moody’s filed its quarterly and annual financial reports on days other than Friday. Perhaps filing at the end of the week was pure happenstance, but this leads one to wonder just how eager Moody’s really was to let its investors know about the Wells notice.

Although Goldman did not disclose the Wells notice it received, it has been decidedly more transparent about litigation it faces since the S.E.C. filed its suit on April 16. The firm filed an 8-K listing various legal actions that shareholders have filed in the wake of the S.E.C. suit, and its most recent quarterly report describes potential collateral consequences if the firm is subject to an injunction or cease-and-desist order. Its disclosures go well beyond the usual “we can’t anticipate the potential outcome of litigation” boilerplate often seen in corporate filings, perhaps signaling that Goldman has undergone a change of heart regarding its litigation disclosure obligation.

The disclosure by Moody’s about the Wells notice came well within the dictates of the disclosure rules. Investors who bought its shares after the S.E.C. notified the firm on March 18 may argue that they were defrauded by the company’s silence, but I think it is doubtful they can make out a securities violation when the law gives corporate issuers such wide discretion to decide whether legal proceedings are material and when they must be disclosed.

But whether the disclosure met the requirements of the law does not answer the broader question of whether Moody’s should have disclosed the information earlier. If the Wells notice was sufficiently important to include in the 10-Q, then why not let the public know earlier through the filing of an 8-K? Making the disclosure is a positive thing, but as always, timing in life is everything.

– Peter J. Henning

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From: scion5/12/2010 2:41:20 PM
   of 122081
Investment firm that steered Upstate unions to Bernie Madoff is sued by NY attorney general

By Mike McAndrew / The Post-Standard
May 12, 2010, 6:00AM

Syracuse, NY - An investment firm defrauded Upstate New York union pension plans out of $150 million by urging them to invest in Bernard Madoff-controlled accounts for a decade after it suspected Madoff was running a Ponzi scheme, the state attorney general’s office said Tuesday.

In 1997, officers of Ivy Asset Management LLC discovered Madoff had claimed to have made trades with clients’ assets that were never made, according to a suit filed by Attorney General Andrew Cuomo. Ivy’s senior executives concluded in 1998 that none of the investments they managed for their firm’s clients should be placed with Madoff, the suit alleged.

But the same Ivy officers kept advising Syracuse financial adviser John Jeanneret and dozens of unions whose pensions Jeanneret managed to continue to invest in Madoff-controlled funds, the suit claimed.

Ivy never told Jeanneret and the unions it suspected Madoff was running a Ponzi scheme because it would lose $40 million in business, the attorney general alleged.

When Madoff was arrested in December 2008 and admitted he was running an elaborate Ponzi scheme, the union pension funds lost more than $150 million, Cuomo alleged.

Madoff had raided the retirement funds of Upstate union roofers, carpenters, heavy equipment operators, electrical workers, laborers and plumbers.

Syracuse asset manager John Jeanneret was misled by Ivy Asset Management executives about Bernard Madoff, according to the attorney general's suit.
Roofers Local 195 in Cicero lost $13.5 million, or 90 percent of its pension fund, according to the union.

Jeanneret, who runs J.P. Jeanneret Associates in Syracuse, managed investments for dozens of benefit plans covering about 60,000 union workers Upstate. His firm is being sued by unions representing 21 locals.

But Jeanneret and his firm are not defendants in the attorney general’s suit. The AG’s complaint suggests Jeanneret was misled by Ivy’s executives.

Notes and emails included in the suit reveal Ivy executives suspected Madoff a decade before his scam blew up. Yet, they repeatedly assured Jeanneret and the unions that their investments were safe.

In 2000, Jeanneret asked Ivy President Lawrence Simon, “Is he (Madoff) essentially legitimate?” Madoff was “essentially legitimate,” Jeanneret was told, the suit alleged.

“We have no reason to believe there is anything improper in the Madoff operation,” Ivy’s senior officers wrote to Jeanneret in 1999.

But at the same time, Ivy executives were considering withdrawing $5 million of the firm’s money from Madoff accounts because of their suspicions. Ivy’s chief of investment management recommended that, and suggested the firm’s union clients should be told.

“Would the Engineers, Jeanneret and others walk away from Madoff if Ivy withdraws its money?” wrote Ivy’s chief of investment management. “Based on the amounts of capital they have invested with BLM (Madoff), my perception is that they are quite satisfied with Madoff and would not want to leave. In the case of Jeanneret, he hardly listens to our advice at all, and our pleas to the Engineers for more diversification have for the most part fallen on deaf ears.”

Ivy withdrew its own investments in Madoff in 2000, but misled Jeanneret and the unions about the reason it did that, Cuomo’s suit alleges.

Barbara Hart, the lead counsel representing the unions in class action suits against Jeanneret and Ivy, said the suit corroborates the unions’ allegations against both.

“We don’t know if Jeanneret knew it was a Ponzi scheme,” Hart said, but she said Jeanneret did not meet his fiduciary duty to protect his clients’ assets.

Contact Mike McAndrew at or 470-3016.

Click here to read the attorney general's suit against Ivy Asset Management.

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To: SEC-ond-chance who wrote (110230)5/12/2010 7:26:58 PM
From: StockDung
   of 122081
SEC target Offill appeals eight-year sentence

2010-05-12 15:09 ET - Street Wire

Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission
Also Street Wire (U-AVLL) AVL Global Inc

by Mike Caswell

Phillip Offill, the Texas securities lawyer convicted of fraud, has launched an appeal of his eight-year sentence and $4.8-million forfeiture order. (All figures are in U.S. dollars.) On May 10, 2010, his lawyer, public defender Kevin Brehm, filed an appearance at the United States Court of Appeals for the Fourth Circuit, indicating his client's intention to appeal the sentence.

Mr. Offill, 51, has been in jail since a Virginia jury found him guilty of 10 counts of securities fraud on Jan. 28, 2010. The conviction came after a 10-day trial, during which prosecutors successfully argued that he helped insiders of nine public companies illegally acquire free-trading shares. The insiders then sold their stock in various pump-and-dump or market manipulation schemes. The stocks included AVL Global Inc., a pink sheets listing run by Ontario father and son Peter and Tyler Fisher.

Offill's sentencing

The subject of Mr. Offill's appeal is his sentence, handed down on April 23, 2010, by Virginia Judge Liam O'Grady. Mr. Offill had sought a jail term of one to three years, arguing that his earnings from the scheme were restricted to $125,700 in transaction fees. He also claimed that he did not participate in any actual pump-and-dumps.

Prosecutors sought a term of 14 to 17 years, stating that Mr. Offill was essential to a scheme that defrauded thousands of investors of millions of dollars. He used his specialized knowledge as a securities lawyer, some of which he had obtained during 15 years with the U.S. Securities and Exchange Commission.

The judge agreed that Mr. Offill's sentence should be substantial, citing several outright lies that he told on the witness stand during the trial. In addition to the eight-year jail sentence, the judge imposed three years of supervised release. He also ordered Mr. Offill to forfeit several assets, including a 1972 Porsche 911 and a 2001 Harley-Davidson.

While Mr. Offill has not stated the grounds for his appeal, he has previously presented arguments against his conviction. In a motion for acquittal filed on Feb. 11, 2010, he said that prosecutors did not present any evidence that he did anything illegal. All he did was help investors acquire shares under a Rule 504 exemption. There was no evidence that he participated in any subsequent pump-and-dumps, or that he even knew about them, the motion stated.

Mr. Offill may also repeat an earlier argument that he presented before his sentencing. He said that prosecutors were seeking an excessive sentence, given that his financial gain was minimal compared with others indicted in the scheme. The largest sentence, 10 years, went to Michael Saquella, a promoter who earned $9.5-million according to prosecutors. Also receiving a lesser sentence was Mr. Offill's partner, Arizona lawyer David Stocker. He pleaded guilty early in the scheme, and admitted that he made $2.25-million. Judge O'Grady sentenced him to 33 months and ordered him to pay $6.3-million in restitution.

The others received even lesser sentences. They were French spammer Justin Medlin, who received six years; stock promoters Steven Luscko and Gregory Neu, who received five years each; Lawrence Kaplan, who received three years; Brian Brunette, who received one year; Anthony Tarantola, who received six months; and Henry "Hank" Zemla, who received three months.

Offill's indictment

Mr. Offill's sentencing came over one year after his indictment, which prosecutors filed on March 12, 2009, in the Eastern District of Virginia. They claimed that he and Mr. Stocker devised a method to illegally obtain free-trading shares in public companies by improperly using Rule 504, which is normally only available to accredited investors who do not plan to sell their shares.

The indictment described the AVL Global scheme as a typical example. Mr. Offill initially purchased AVL Global shares using a private company he controlled called Collective Thought Holdings Inc. He then prepared a blank stock transfer form that allowed Mr. Stocker to transfer the stock to anybody he designated. Mr. Stocker made the shares freely tradable by preparing a legal opinion letter which stated that the stock complied with Rule 504. Within days, the Fishers were able to obtain 10 million free-trading shares in AVL Global.

The indictment did not state exactly what the Fishers did with the stock, but a parallel civil suit filed by the SEC filled in that information. The regulator claimed that the Fishers pumped AVL Global to $4.10 and dumped thousands of shares while touting a phony agreement with the government of Botswana. The Fishers both deny any wrongdoing, and that case has been on hold pending the outcome of Mr. Offill's criminal case.

In addition to AVL Global, the indictment listed eight other companies whose insiders received similar assistance from Mr. Offill and Mr. Stocker. They were Emerging Holdings Inc., MassClick Inc., China Score Inc., Auction Mills Inc., Custom-Designed Compressor Systems Inc., Ecogate Inc., Media International Concepts Inc. and Vanquish Productions Inc.

Offill's Vancouver connections

Although Mr. Offill resided in Texas, two of his former clients have connections to Vancouver. One was David Whittemore, a Texas man sued by the SEC for transmitting phony voice mails. The messages were designed to deceive the recipient into thinking he had received a hot stock tip left at the wrong number. One of the companies that Mr. Whittemore touted with these messages was Vancouver-based Yap International Inc.

Another one of Mr. Offill's customers was Nexus Asset Holdings LLC, a private company managed by Vancouver lawyer John Briner. Government records show that Mr. Offill filed the initial incorporation records for Nexus. The company received mention in a subsequent civil suit filed by the SEC, in which the regulator claimed that Mr. Briner and a Toronto man, Jay Budd, manipulated pink sheets listing Golden Apple Oil & Gas Inc. The complaint stated that Nexus held shares of Golden Apple. Mr. Briner denies any wrongdoing, and Mr. Budd settled out of court, without admitting any wrongdoing.

With Mr. Offill's sentencing complete, the Bureau of Prisons will soon transfer him to the jail in which he will serve his sentence. The judge recommended Federal Correctional Institute Seagoville, a low security jail near Dallas that houses 1,851 federal inmates. The Bureau of Prisons is not bound to follow the recommendation, so Mr. Offill could find himself in any low security jail in the U.S.


Reader Comments - Comments are open and unmoderated, although libelous remarks, including names, may be deleted. Opinions expressed do not necessarily reflect the views of Stockwatch.
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I wonder what the success rate for appeals are in the US?

Posted by James @ 2010-05-12 15:16


Appeals can sometimes go either way. In the Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158, the claimant appealed (successfully) on the basis that, although he won in the court below, the lower court had applied the wrong measure of damages and he had not been fully recompensed. I don't see this happening in this case but it is never a sure bet.

Posted by Tim Drewer @ 2010-05-12 15:23


Can the appeal overturn the previous courts decisions? That is will the judgment change if this goes before the appeals court?

Posted by James @ 2010-05-12 15:57


They should double the sentence, and throw John Briner in the cell with him.

Posted by Mr. Budd @ 2010-05-12 16:25


The appelle court does not decide whether a defendant is guilty or innocent. Rather, the question before the court of appeals is whether there are one or more legal errors that affected the verdict. If these legal mistakes are important enough, then the case is sent back to the trial court, usually for a retrial. On fewer occasions, where the law prohibits further prosecution, a case will be reversed with directions to dismiss it. If the legal mistakes only concerned a sentence, then the defendant may be entitled to resentencing.

Posted by Tim @ 2010-05-12 16:38


French spammer Justin Medlin, who received six years; stock promoters Steven Luscko and Gregory Neu, who received five years each; Lawrence Kaplan, who received three years; Brian Brunette, who received one year; Anthony Tarantola, who received six months; and Henry "Hank" Zemla, who received three months.

When will Vancouver based pump and dumpers spend time in jail?

Posted by Teflon @ 2010-05-12 17:09


"Golden Apple. Mr. Briner denies any wrongdoing"

What??? John Briner issued fake bogus illegal opinion letters for millions upon millions of fake bogus counterfeit shares that were dumped into the open market. Over ***$5 MILLION*** was ***STOLEN*** from the investing public on that stinking scam alone. Is John Briner on drugs or something??????

Posted by Rotten Apple @ 2010-05-12 17:15


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From: StockDung5/12/2010 7:38:56 PM
   of 122081




Skins Footwear Inc files for Ch. 7 bankruptcy
Sun Aug 16, 2009 6:01pm

NEW YORK, Aug 16 (Reuters) - Shoemaker Skins Footwear Inc SKNN.OB filed for Chapter 7 bankruptcy, citing assets of less than $50,000 and liabilities of between $10 million and $50 million, according to court documents filed on Friday in federal bankruptcy court in Delaware.


The New Jersey-based company makes shoes with a two-part structure consisting of an outer collapsible, interchangeable shell called its "skin," and an inner orthopedic support section called the "bone."

The case is Skins Footwear Inc, U.S. Bankruptcy Court for the District of Delaware, No 09-12888.


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