| To: scion who wrote (110335) | 4/28/2012 12:10:53 PM | | From: scion | | | | Prosecutors also charged Florida-resident Stephen W. Carnes, 48, with the same charges. Court documents identify Carnes as the managing member of Buckwheat Holdings, LLC and Lincoln Plaza Internet Sensations, which share the same address on file with the Indiana Secretary of State.
The two companies are also charged with promoting professional gambling and professional gambling. Charging the companies allows the state, if it receives a conviction, to collect a fine from them, said Allen County Chief Deputy Prosecutor Michael McAlexander.
A fourth man, 36-year-old Jared Hochstedler, of the 700 block of Misty Court, is charged with professional gambling and money laundering.
Raid results in gambling charges
Last updated: April 27, 2012 8:55 p.m.
journalgazette.net
Rebecca S. Green | The Journal Gazette
Four months after state gaming agents raided a local internet café, the businesses owners and some employees are charged with running a professional gambling racket and money laundering.
In late December, Indiana Gaming Commission agents raided Lincoln Plaza Internet Sensations in New Haven and Wrigley Field Bar and Grill, removing a total of 51 machines after two undercover investigations.
On Friday, Allen County prosecutors charged Fort Wayne residents Edward G. Miers, 26, of the 2600 block of Kingston Place, and Matthew Rae, 28, of the 6300 block of Kiwanis Drive, with corrupt business influence, promoting professional gambling, professional gambling and money laundering. The two men operated Lincoln Plaza Internet Sensations, according to court documents.
The money laundering charge alleges they acquired, received, possessed or transferred the proceeds of the illegal professional gambling operation, according to court documents.
Prosecutors also charged Florida-resident Stephen W. Carnes, 48, with the same charges. Court documents identify Carnes as the managing member of Buckwheat Holdings, LLC and Lincoln Plaza Internet Sensations, which share the same address on file with the Indiana Secretary of State.
The two companies are also charged with promoting professional gambling and professional gambling. Charging the companies allows the state, if it receives a conviction, to collect a fine from them, said Allen County Chief Deputy Prosecutor Michael McAlexander.
A fourth man, 36-year-old Jared Hochstedler, of the 700 block of Misty Court, is charged with professional gambling and money laundering.
According to court documents, Lincoln Plaza Internet Sensations sold “internet air time” for $5 an hour. For each hour purchased, customers received five free sweepstakes credits, which could then be used to place bets on “Vegas style games” accessed from Lincoln Plaza Internet Sensations computers.
Winners received $1 a winning credit, according to court documents.
Gaming agents conducted undercover investigations at the internet café, as well as at Wrigley Field Bar and Grill – where similar machines were placed.
The machines were all owned, according to court documents, by Carnes, but were installed at Wrigley Field Bar and Grill and other bars by Hochstedler and Rae.
In September, the state’s Alcohol and Tobacco Commission issued a notice declaring “sweepstakes machines” to be “electronic gaming devices,” according to court documents.
Another memo was issued Dec. 19, saying “sweepstakes machines” popping up in bars, restaurants, convenience stores and other premises that sold alcohol were not allowed, even for businesses authorized to have pull-tab-type games. State officials said at the time of the raids that Internet sweepstakes machines can quickly become a problem and already have become prevalent in states such as Ohio, North Carolina and Florida.
But those who run such cafes say the machines are analogous to McDonald Restaurant’s “Monopoly” game, where customers buy food, get a ticket and have a chance to win.
“Simply put, the sweepstakes machines are our Monopoly game and the Internet or phone time is our cheeseburger. This makes it legal,” said court documents quoting a website selling sweepstakes machines.
Since the December raid, attorneys representing Buckwheat Holdings filed a lawsuit in Marion County Superior Court, seeking a determination against the Indiana Alcohol and Tobacco Commission that the machines are not electronic gaming devices.
According to court documents, a Marion Superior Court judge ruled against Buckwheat Holdings, saying that the customers are paying for gambling games whether they receive internet time with their purchase.
In January, Buckwheat Holdings’ attorneys filed a federal lawsuit in the U.S. District Court in Fort Wayne, asking a judge to find the gaming agents reliance on the state’s gaming laws are misguided, and to determine the seizure of the machines violated the company’s constitutional rights.
That case is still pending, with attorneys for the State of Indiana asking for a delay to allow the issues to be decided in a state court, according to federal court records.
In January 2011, Edward G. Miers’ father, Edward Miers, received a sentence of probation for his connection to an illegal charity gaming operation – the Parnell Poker Palace. Edward Miers was originally charged with a felony charge of professional gambling.
Edward R. Miers and Carnes have another business together – using the same 160 East Lake Brantley Drive, Longwood, Fla. address as Buckwheat Holdings and Lincoln Plaza Internet Sensations. That one, called “Kryptos” offers an application for Blackberry, iPhone and Android smart phones that purports to offer an encrypted voice services, according to the company’s website.
On his own website, in a picture posing in front of an FBI building, Carnes said he is president and CEO of Kryptos Communications.
rgreen@jg.net
journalgazette.net |
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| To: StockDung who wrote (114672) | 4/28/2012 2:51:57 PM | | From: Covenant | | | | Covering their tracks? (SEFE)April 25, 2012 – 8:11 pmPosted in Bucket Shops, Fail, Morons, Reverse Mergers
Let’s take another quick break from our chronological look at current reverse-merger darling SEFE, Inc. (SEFE), to examine this morning’s Form D filing from the company.
Form D filings are required when a company attempts to raise money under one of the Reg D exemptions to the registration requirements of the SEC. Essentially, the company is attempting to sell unregistered securites. The rules are very clear, and one of the rules concerns when the Form D must be submitted:
An issuer must file a new notice with the SEC for each new offering of securities no later than 15 calendar days after the “date of first sale” of securities in the offering
So, if a company met the Reg D exemption and were to sell stock on April 10, 2012, they would need to file their Form D today.
On SEFE‘s newly filed Form D, available here, they announce that this is a new notice and they wish to raise $8mm under Rule 506. As of the date of the notice they have raised $854,500.00. Not very impressive fundraising for a company with a stock as hot as SEFE‘s.
But that is not the fascinating part. The filing gets quite interesting when one examines the date of first sale. It is April 13, 2011.
SEFE is a little less than a year delinquent on this filing. So is the company trying to cover up their tracks?
buyersstrike.wordpress.com |
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| To: Covenant who wrote (114675) | 4/28/2012 6:21:47 PM | | From: StockDung | | | | SEFE Promoted by 13 Promoters with 53 Newsletters
stockpromoters.com
Promoted Date Symbol Promoter Name Compensation | 4/27/2012 | SEFE | Hot Stock Profits | We have not been compensated for SEFE or AGCZ. | | 4/27/2012 | SEFE | Penny Stock Wizard | None Listed | | 4/27/2012 | SEFE | Super Stock Hunter | None Listed | | 4/27/2012 | SEFE | Epic Stock Picks | None Listed | | 4/27/2012 | SEFE | Darth Trader | We have not been compensated for SEFE and we own no position. We have not been compensated for THE release of this specific communication (email, text, social media, blog posting), but any future communications pertaining to a specific company will be THE result of a paid promotional investor relations marketing campaign, for which IPR Agency LLC receives financial compensation. We have not been compensated in any way for THE mention of any other companies named in this communication, and we own no position in any of them. | | 4/27/2012 | SEFE | The Stock Psycho | We have not been compensated for SEFE and we own no position. We have not been compensated for THE release of this specific communication (email, text, social media, blog posting), but any future communications pertaining to a specific company will be THE result of a paid promotional investor relations marketing campaign, for which IPR Agency LLC receives financial compensation. We have not been compensated in any way for THE mention of any other companies named in this communication, and we own no position in any of them. | | 4/26/2012 | SEFE | Penny Stock Wizard | Is a wholly owned subsidiary of Stocks Digest LLC and is being compensated one hundred thousand dollars from Speed Evolution Ltd. by a third party. | | 4/26/2012 | SEFE | Super Stock Hunter | Is being paid $150,000.00 from Speed Evolution Ltd. | | 4/26/2012 | SEFE | Darth Trader | We have not been compensated for SEFE and we own no position. We have not been compensated for this specific communication (email, blog, social media, or otherwise) however any future communication from us regarding a specific company will be the result of paid promotional investor relations advertising, for which IPR Agency LLC receives financial compensation. We have not been compensated in any way for the mention of any other companies named in this communication, and we own no position in any of them. | | 4/26/2012 | SEFE | The Stock Psycho | We have not been compensated for SEFE and we own no position. We have not been compensated for this specific communication (email, blog, social media, or otherwise) however any future communication from us regarding a specific company will be the result of paid promotional investor relations advertising, for which IPR Agency LLC receives financial compensation. We have not been compensated in any way for the mention of any other companies named in this communication, and we own no position in any of them. | | 4/26/2012 | SEFE | Jackpot Stock Picks | Jackpotstockpicks.COM expects to receive $30,000 cash via bank wire for providing marketing, advertising AND promotional services for SEFE by a third party (Windsor Investir) for one day (these services have expired) Jackpotstockpicks.COM does NOT own any shares of the companies mentioned in this EMAIL. | | 4/26/2012 | SEFE | Raging Stock Bull | Ragingstockbull.COM expects to receive $30,000 cash via bank wire for providing marketing, advertising AND promotional services for SEFE by a third party (Windsor Investir) for one day (these services have expired) Ragingstockbull.COM holds NO positions in the company being featured in this EMAIL communication, however the third party may hold shares AND may liquidate positions before, during or after the release of this EMAIL communication. | | 4/26/2012 | SEFE | Special Penny Stocks | Tribeca Investments Ltd engaged in the business of advertising and promoting companies for monetary compensation. SpecialPennyStocks.com expects to receive $40,000 for marketing services for SEFE by a non-controlling third-party shareholder. | | 4/26/2012 | SEFE | Penny Stock Market Bulls | Pennystockmarketbulls.COM expects to receive $30,000 cash via bank wire for providing marketing, advertising AND promotional services for SEFE by a third party (Windsor Investir) for one day (these services have expired). | | 4/25/2012 | SEFE | Special Penny Stocks | Tribeca Investments Ltd engaged in the business of advertising and promoting companies for monetary compensation. SpecialPennyStocks.com expects to receive $40,000 for marketing services for SEFE by a non-controlling third-party shareholder. | | 4/25/2012 | SEFE | Penny Stock Wizard | None Listed | | 4/25/2012 | SEFE | Hot Stock Profits | We have not been compensated for SEFE or AGCZ. | | 4/24/2012 | SEFE | Surfs Up Stocks | None Listed | | 4/24/2012 | SEFE | Hot Stock Profits | We have not been compensated for SEFE or AGCZ. | | 4/24/2012 | SEFE | Penny Stock Wizard | None Listed | | 4/24/2012 | SEFE | Super Stock Hunter | None Listed | | 4/23/2012 | SEFE | The Stock Psycho | We have NOT been compensated for SEFE and we own no position. We have NOT been compensated in any way for THE mention of any other companies named in THIS communication, and we own no position in any of them. | | 4/23/2012 | SEFE | Darth Trader | We have NOT been compensated for SEFE and we own no position. We have NOT been compensated in any way for THE mention of any other companies named in THIS communication, and we own no position in any of them. | | 4/23/2012 | SEFE | Rocka $tocks | www.rockastocks.com $$$ DISCLAIMER $$$ To view this disclaimer please visit: Rocka Stocks Disclaimer Rockastocks has not been compensated for SEFE This message was sent to Stockpromoters from: Alpha Exclusive | P.O. | | 4/23/2012 | SEFE | Raging Stock Bull | Ragingstockbull.com expects to be compensated $30,000 cash via bank wire to provide marketing, advertising AND promotional services for SEFE by a third party (Windsor Investir) for one day. | | 4/23/2012 | SEFE | Jackpot Stock Picks | Jackpotstockpicks.com expects to be compensated $30,000 cash via bank wire to provide marketing, advertising AND promotional services for SEFE by a third party (Windsor Investir) for one day. | | 4/23/2012 | SEFE | Penny Stock Market Bulls | Pennystockmarketbulls.com expects to be compensated $30,000 cash via bank wire to provide marketing, advertising AND promotional services for SEFE by a third party (Windsor Investir) for one day. | | 4/23/2012 | SEFE | Top Gun Stock Picks | We have NOT been compensated for SEFE and we own no position. We have NOT been compensated in any way for THE mention of any other companies named in THIS communication, and we own no position in any of them. | | 4/23/2012 | SEFE | Penny Stock Wizard | None Listed | | 4/22/2012 | SEFE | The Stock Psycho | We have NOT been compensated for SEFE and we own no position. We have NOT been compensated in any way for THE mention of any other companies named in THIS communication, and we own no position in any of them. | | 4/22/2012 | SEFE | Darth Trader | We have NOT been compensated for SEFE and we own no position. We have NOT been compensated in any way for THE mention of any other companies named in THIS communication, and we own no position in any of them. | | 4/22/2012 | SEFE | Top Gun Stock Picks | We have NOT been compensated for SEFE and we own no position. We have NOT been compensated in any way for THE mention of any other companies named in THIS communication, and we own no position in any of them. | | 4/21/2012 | SEFE | Top Gun Stock Picks | We have not been compensated for SEFE and we own no position. We have not been compensated for this specific communication (email, blog, social media, or otherwise) however any future communication from us regarding a specific company will be the result of paid promotional investor relations advertising, for which IPR Agency LLC receives financial compensation. We have not been compensated in any way for the mention of any other companies named in this communication, and we own no position in any of them. | | 4/21/2012 | SEFE | The Stock Psycho | We have not been compensated for SEFE and we own no position. We have not been compensated for this specific communication (email, blog, social media, or otherwise) however any future communication from us regarding a specific company will be the result of paid promotional investor relations advertising, for which IPR Agency LLC receives financial compensation. We have not been compensated in any way for the mention of any other companies named in this communication, and we own no position in any of them. | | 4/21/2012 | SEFE | Darth Trader | We have not been compensated for SEFE and we own no position. We have not been compensated for this specific communication (email, blog, social media, or otherwise) however any future communication from us regarding a specific company will be THE result of paid promotional investor relations advertising, for which IPR Agency LLC receives financial compensation. We have not been compensated in any way for THE mention of any other companies named in this communication, and we own no position in any of them. | |
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| From: scion | 4/30/2012 10:07:09 AM | | | | | | Madoff Costs Surpass Victim Payouts as Strategy Fails
By Linda Sandler - Apr 30, 2012
bloomberg.com
Irving Picard, who said last year he hoped to pay investors in Bernard Madoff’s defunct firm as much as $65 billion, has only put his hands on about $2.6 billion to actually give back to customers.
More than three years after Madoff’s epic swindle collapsed, Picard, the trustee responsible for liquidating the firm, has paid investors back about $330 million, while holding about $2.3 billion in customer accounts. About $6.4 billion that Picard has won in settlements with former Madoff investors is being challenged in court and is unavailable for disbursement.
So far, winding down the Madoff estate has cost more than Picard has sent to customers, with total administrative spending as of March 31 at about $554 million, including fees for Picard, his firm and consultants he hired, according to his April 25 report. At the same time, Picard’s strategy of filing $100 billion of lawsuits to claw back money from Madoff winners has largely collapsed, as federal judges led by U.S. District Judge Jed Rakoff in New York have dismissed about $90 billion of Picard’s claims.
“There is a huge risk about making predictions, because you can never be sure what a court will do,” said Chip Bowles, a bankruptcy lawyer with Bingham Greenebaum Doll LLP in Louisville, Kentucky. “People can object to his fees if he spent millions on litigation and promised a lot of stuff and it didn’t work out.”
Claim Prices Slump
As a result of Picard’s setbacks in court, bids for claims on the Madoff estate, which peaked at about 70 cents on the dollar in January 2011, now sell in “the low 50s,” said Joseph Sarachek, CRT Capital Group LLC’s managing director of claims trading.
The price also reflects the likelihood that the payoff for investors who lost money in Madoff’s fraud may be far off, Sarachek said. That in turn makes it harder for claimholders to sell their IOUs at attractive prices.
“It does look like the case is going on for several years,” he said.
Amanda Remus, a Picard spokeswoman, didn’t immediately respond to an e-mail asking if the trustee has revised his estimate of how much he will ultimately pay Madoff customers.
Picard’s latest estimate of the con man’s fictitious customer statements is $52 billion. That includes $17.3 billion in actual money invested, with the rest being the fake profits Madoff invented for customer statements. As of December, Picard estimated the total at $65 billion, before the withdrawal of some claims.
SIPC Payments
The $330 million he has sent to customers, out of the $2.6 billion set aside for them, contrasts with about $800 million they’ve received from the insurance program of the Securities Investor Protection Corp., which hired Picard and pays him.
SIPC, which is funded by the major brokerage firms, no longer expects Picard to pay all currently allowed claims of $17.3 billion in full, “based on current trustee assets, lawsuits filed, and the estimated possibilities for recoveries arising from that litigation,” the U.S. Government Accountability Office said in a March report.
Even if Picard gets all of the $9 billion he says he has raised, he would need another $8 billion or so to pay the claims, the GAO said.
“SIPC does not now expect this level of recoveries to occur,” the report said.
Picard Fees
As of March 31, Picard himself has been paid about $5.1 million in fees. His law firm, Baker & Hostetler LLP, has been paid about $262.2 million in fees. All professional fees and expenses now stand at about $522 million, with about $31.7 million having been spent on general administrative costs such as office rent and telephones. By 2014, the bill will top $1 billion, Picard has estimated.
Most of the money Picard says he has raised came from settlements, not court victories for his lawsuits, and he is fighting to preserve his exclusive right to sue parties that allegedly profited knowingly from the fraud.
Some customers say he is usurping their rights. After a district judge in March upheld Picard’s $5 billion agreement with Jeffry Picower’s estate -- his biggest settlement by far -- lawyer Helen Chaitman appealed on behalf of a client. Chaitman will “absolutely” take the case as far as the U.S. Supreme Court if necessary, she said in an e-mail -- a process that could take more than a year.
Picower Withdrawals
Picard’s 2009 suit claimed that Picower, one of the con man’s largest individual investors, should have known Madoff ran a Ponzi scheme when he withdrew $7.2 billion from the brokerage. Sarachek said Madoff claim prices were around their peak in January 2011, when a judge approved the Picower forfeiture, with $5 billion going to the Madoff estate and $2.2 billion to the U.S.
Some customers regard the Picower settlement as unfair because it stops them from suing the Picower estate themselves.
Picard says he can’t distribute the Picower money until there’s a final court order that can’t be appealed. He didn’t have to lock himself into waiting for finality, as Picower’s estate didn’t make that a condition of forfeiting money, Chaitman said in a court filing.
The delay in paying customers “is totally of the trustee’s own making,” she said. Chaitman has also challenged most of his fee requests.
“Unfortunately, Madoff’s victims have not received the benefits of Mr. Picard’s services,” Chaitman said in an e-mail.
Overlapping Claims
Picard opposes her right to sue the Picower estate, saying her claims overlap with his, which take priority as he is trustee. Moreover, if Chaitman wins the right to sue the Picower estate for her customers, and wins her suit, she may be choosing who gets the money. Only the trustee can claw back and allocate money allegedly stolen from Madoff customers, Picard has said.
Picard’s claim to an exclusive right to sue for Madoff recoveries has embroiled him in a battle with California Attorney General Kamala Harris over investment adviser Stanley Chais’s estate. Harris is trying to pursue a $270 million action against the estate, alleging Chais passed himself off as an “investment wizard” and collected fees for “doing nothing more than funneling all of his investors’ capital into an epic Ponzi scheme.”
Picard sued Harris Jan. 4 in U.S. Bankruptcy Court in Manhattan, saying her suit interferes with the collection of assets needed to help compensate Madoff victims. A Manhattan court hearing is set for May 17.
Tremont Group
Madoff customers also have challenged Picard’s $1 billion deal with Tremont Group Holdings Inc. and a $220 million settlement struck with the heirs of Norman F. Levy. Chaitman alleges that Levy, who died in 2005 at age 93, financed Madoff’s Ponzi scheme to the tune of about $100 billion.
Picard also won’t pay out any more from the customer fund without a “final unappealable decision” on whether he owes them not only the money they invested, but also the fictitious profit on their brokerage statements, according to his website. The owners of the New York Mets baseball team, whom Picard had sued for $1 billion, were among those challenging Picard’s calculation of how they should be paid, until they reached a $162 million settlement that doesn’t require them to pay any money for at least four years, if ever.
The U.S. Supreme Court delayed a scheduled conference on whether it will consider an appeal by Madoff customers who say they should be compensated for loss of profits reported on their brokerage statements until after May 25, when it wants the U.S. Securities and Exchange Commission to weigh in on the subject. Allowable claims would treble to $52 billion if the judges agreed with the customers -- Picard’s current estimate of total fictitious profits in the Ponzi scheme.
The case is Picard v. Katz, 11-cv-03605, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net
To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net
bloomberg.com |
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| From: StockDung | 4/30/2012 12:15:52 PM | | | | | | Geoffrey Eitens stock fraud promotion Locate Plus update
-----------------------------------------------------------------------------------------------------------------
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE ACT OF 1934
Release No. 66877 / April 30, 2012
IN THE MATTER OF LOCATEPLUS HOLDINGS CORPORATION
The United States Securities and Exchange Commission (Commission) announced the temporary suspension of trading in the securities of LocatePlus Holdings Corporation ("LocatePlus"), commencing at 9:30 a.m. EDT on April 30, 2012 and terminating at 11:59 p.m. EDT on May 11, 2012. The Commission temporarily suspended trading in the securities of LocatePlus due to a lack of current and accurate information about the company because it failed to file certain periodic reports with the Commission. The order was entered pursuant to Section 12(k) of the Securities Exchange Act of 1934 (Exchange Act).
The Commission cautions brokers, dealers, shareholders and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by this company.
Brokers and dealers should be alerted to the fact that, pursuant to Exchange Act Rule 15c2-11, at the termination of the trading suspension, no quotation may be entered relating to the securities of LocatePlus unless and until the broker or dealer has strictly complied all of the provisions of the rule. If any broker or dealer is uncertain as to what is required by the rule, it should refrain from entering quotations relating to the securities of LocatePlus until such time as it has familiarized itself with the rule and is certain that all of its provisions have been met. Any broker or dealer with questions regarding the rule should contact the staff of the Securities and Exchange Commission in Washington, DC at (202) 551-5720. If any broker or dealer enters any quotation which is in violation of the rule, the Commission will consider the need for prompt enforcement action.
If any broker, dealer or other person has any information which may relate to this matter, John T. Dugan of the Boston Regional Office of the Securities and Exchange Commission should be telephoned at (617) 573-8936. |
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| From: scion | 4/30/2012 4:46:02 PM | | | | | | SEC FILES CHARGES AGAINST FORMER ATTORNEY FOR MUTUAL BENEFITS
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22350 / April 30, 2012
Securities and Exchange Commission v. Michael J. McNerney, Civil Action No. 1:12-cv-21627
The Securities and Exchange Commission announced today that it filed a complaint against Defendant Michael J. McNerney, charging him with violations of the federal securities laws arising from his involvement in Mutual Benefits Corp.’s (“MBC”) offering fraud which raised more than $1 billion from approximately 29,000 investors. From 1995 through at least May 2004, McNerney served as primary securities regulatory counsel for MBC. The complaint alleges thatin this role, he helped conceal the fraud, met with investors, and supervised the filing of false reports with state regulators. The Commission’s complaint charges McNerney with aiding and abetting MBC’s violations of Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. The Commission seeks permanent injunctive relief against McNerney, who has consented to the entry of Final Judgment providing for full injunctive relief.
In addition to the civil action against McNerney, the Commission simultaneously issued an Order pursuant to Rule 102(e)(2) of the Commission’s Rules of Practice forthwith suspending McNerney from appearing or practicing before the Commission based on the entries of a felony conviction against him. On August 26, 2011, the Honorable Adalberto Jordan, United States District Judge for the Southern District of Florida, sentenced McNerney to 5 years in prison, followed by three years of supervised release, and ordered him to pay restitution, along with his co-conspirators, in the amount of $826,839,642.
On May 3, 2004, the Commission first halted the on-going fraud at MBC when it filed a contested emergency civil enforcement action against MBC and its principals. In its complaint, the Commission alleged that the defendants raised over $1 billion from thousands of investors through a fraudulent, unregistered offering of securities in the form of fractionalized interests in viatical and life settlements. The Commission obtained a restraining order to halt the alleged fraud at MBC, and thereafter the United States District Court for the Southern District of Florida appointed a receiver to identify and trace the assets of MBC.
The Commission’s actions regarding MBC have resulted in nine injunctions and other relief against nine defendants and eight relief defendants, and orders to pay disgorgement and civil penalties totaling $30 million. In addition, the United States Attorney’s Office for the Southern District of Florida has charged 12 defendants in criminal actions for their roles in the fraud.
The SEC acknowledges the work of the United States Attorney’s Office for the Southern District of Florida, the Federal Bureau of Investigation, Miami Field Office, and the Internal Revenue Service, Criminal Investigation Division in this matter.
For additional information see Litigation Release No. 18698 (May 6, 2004), Litigation Release No. 19274 (June 20, 2005), Litigation Release No. 19480 (December 1, 2005), Litigation Release No. 19978 (January 24, 2007), Litigation Release No. 20151 (June 13, 2007), Litigation Release No. 20459 (February 15, 2008), Litigation Release No. 20521 (April 7, 2008), and Litigation Release No. 20521 (April 7, 2008), and Litigation Release No. 22084 (September 7, 2011).
SEC Complaint in this matter
sec.gov
sec.gov |
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| From: scion | 4/30/2012 6:12:54 PM | | | | | | EC Charges Mother, Daughter, and Their Attorney in Illegal Penny Stock Scheme
FOR IMMEDIATE RELEASE
2012-80
Washington, D.C., April 30, 2012 — The Securities and Exchange Commission today charged a mother and daughter along with their attorney in a scheme to unlawfully acquire and sell billions of shares of penny stock in unregistered transactions.
Additional Materials
SEC Complaint
sec.gov
The SEC alleges that Christel S. Scucci and her mother Karen S. Beach, who live in Florida, used alter ego companies (Protégé Enterprises LLC and Capital Edge Enterprises LLC) to make more than $1.5 million from selling approximately 3.3 billion shares of purportedly unrestricted stock that they acquired in so-called debt conversion “wrap around” transactions. They were able to sell most of this stock only because Florida-based attorney Cameron H. Linton issued baseless legal opinions for them stating that the stock could be issued without restrictive legends and that their re-sales were exempt from the registration requirements of the federal securities laws.
“This case shines a spotlight on unlawful profiting from transactions designed to circumvent the registration requirements of the federal securities laws,” said Stephen L. Cohen, an Associate Director in the SEC’s Division of Enforcement. “This should alert transfer agents, securities attorneys and other industry gatekeepers to closely scrutinize efforts to lift restrictive legends by ‘tacking’ onto delinquent debt through wrap around agreements.”
According to the SEC’s complaint filed in federal court in Orlando, Fla., this scheme involving the illegal use of wrap around agreements lasted from January 2010 to October 2011. Under the wrap around agreements, affiliates or others purportedly owed money by certain microcap issuers for more than one year assigned from the issuers to Protégé or Capital Edge the right to collect the debts. The wrap around agreements also purported to amend the initial debt agreements thereby allowing Protégé and Capital Edge to convert the money owed to them by the issuers into shares of the issuers’ common stock at a deep discount (usually 50 percent) to the prevailing market price. Protégé and Capital Edge almost always elected to receive stock from the issuers shortly after execution of the wrap around agreements. None of the transactions were registered with the SEC.
The SEC alleges that Protégé and Capital Edge paid Linton to write attorney opinion letters for them stating that their sales of the stock acquired under these wrap around agreements lawfully could be issued to them without a restrictive legend and immediately sold to the public. Protégé and Capital Edge regularly sold the stock into the public market, often for large profits, merely days or weeks after they acquired the shares through the wrap around conversions.
According to the SEC’s complaint, Linton’s legal opinion letters lacked any basis. The premise of Linton’s opinion letters was that – through the wrap around agreements and debt conversion – Protégé and Capital Edge were able to “tack” the period that had elapsed from the initiation of the original debt at least one year earlier to claim a registration exemption relying on Securities Act Rule 144(d)(3)(ii). When Linton wrote the opinion letters, he lacked an understanding of the applicable legal principles and failed to substantiate the factual predicate for his opinions. Furthermore, in mid-2010, Linton became aware of an injunction issued in a separate SEC enforcement action (SEC v. K&L International Enterprises) in which two of his letters were used in a similar scheme. Without Linton’s opinion letters, Protégé and Capital Edge couldn’t have acquired most of the stock without a restrictive legend and quickly turn around and sell it publicly.
The SEC’s complaint alleges that Protégé, Capital Edge, Scucci and Beach violated Section 5 of the Securities Act. The complaint further alleges that Linton violated, or aided and abetted the violation of, Section 5 of the Securities Act. The SEC seeks disgorgement, penalties, injunctions, and penny stock bars against the defendants.
The SEC’s case was investigated by Daniel Rubenstein and Adam Eisner under the supervision of C. Joshua Felker, an Assistant Director in the Division of Enforcement. Kenneth Guido will lead the SEC’s litigation.
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| From: StockDung | 4/30/2012 7:45:38 PM | | | | | | Defendants Kenneth A. Wolkoff and George Sobol Settle Charges of Securities Registration Violations in SEC Action
U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 22351 / April 30, 2012 Securities and Exchange Commission v. e-Smart Technologies, Inc., et al, Civil Action No. 1:11-cv-00896-JEB (United States District Court for the District of Columbia) (Filed May 13, 2011) Defendants Kenneth A. Wolkoff and George Sobol Settle Charges of Securities Registration Violations in SEC Action On April 27, 2012, a final judgment was entered against Kenneth A. Wolkoff (“Wolkoff”) and George Sobol (“Sobol”) in an action filed by the Securities and Exchange Commission (“Commission”) in the United States District Court for the District of Columbia against e-Smart Technologies, Inc. (“e-Smart”) and related individuals and entities. In that action, the Commission alleges that defendants Wolkoff and Sobol participated in an unregistered stock offering of e-Smart securities in violation of the securities registration requirements of the Securities Act of 1933 (“Securities Act”) and acted as unregistered broker-dealers in violation of the Securities Exchange Act of 1934 (“Exchange Act”).
Specifically, the Commission alleges that Wolkoff participated in the unregistered stock offering from April 2005 through at least June 2006, completing at least 115 transactions which brought in over $2,600,000 and sold over 26 million e-Smart shares. The Commission also alleges that Sobol participated in the unregistered stock offering from March 2005 through at least June 2006, completing at least 19 transactions which brought in over $890,000 and sold over $8.8 million e-Smart shares. During this period, neither was registered with the Commission as a broker-dealer or associated with a registered broker-dealer.
Wolkoff consented to a final judgment permanently enjoining him from violations of Sections 5(a) and (c) of the Securities Act and Section 15(a) of the Exchange Act. Wolkoff also consented to be barred for five years from participating in the offering or sale of a penny stock, to disgorge all e-Smart stock he received as compensation for his sales efforts and to pay a $40,000 penalty.
Sobol consented to a final judgment permanently enjoining him from violations of Sections 5(a) and (c) of the Securities Act and Section 15(a) of the Exchange Act. And Sobol consented to be barred for five years from participating in the offering or sale of a penny stock, to disgorge all e-Smart stock in which he has a legal or beneficial interest and to pay a $30,000 penalty.
The litigation against the other defendants, alleging violations of the anti-fraud, securities registration, financial reporting, books and records, and internal control provisions of the federal securities laws, is ongoing.
http://www.sec.gov/litigation/litreleases/2012/lr22351.htm
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