SEC v. Yan K. Skwara and US Farms, Inc., Case No. 0:12-cv-61078-JAL (S.D. Fl.); SEC v. Douglas D. Hague and Clean Coal Technologies, Inc., Case No. 0:12-cv-61076-WJZ (S.D. Fl.); SEC v. Joseph J. Repko, Michael M. Cimino, and Sure Trace Security Corp., Case No. 0:12-cv-61079-KMW (S.D. Fl.); SEC v. Ryan F. Coblin and Delivery Technology Solutions, Inc., Case No. 0:12-cv-80599-KLR (S.D. Fl.); SEC v. Robert L. Cotton and Cotton & Western Mining, Inc., Civil Action No. 0:12-cv-61072-WJZ (S.D. Fl.); SEC v. Harold Steven Bonenberger and Angel Acquisition Corp. n/k/a Biogeron, Inc., Case No. 0:12-cv-61075-WPD (S.D. Fl.); SEC v. Matthew A. Connor, Case No. 0:12-cv-61081-RNS (S.D. Fl.); SEC v. Kevin P. Brennan, Donald G. Huggins, and Marc S. Page and Optimized Transportation Management, Inc., Case No. 0:12-cv-61074-JIC (S.D. Fl.); SEC v. Scott A. Haire and Wound Management Technologies, Inc., Case No. 0:12-cv-61077-CMA (S.D. Fl.)
On June 4, 2012, the SEC filed nine civil actions charging several CEOs and their companies, and three penny stock promoters with securities fraud for their roles in various illicit kickback and market manipulation schemes involving microcap stocks. The defendants reside or are based in South Florida, California, Texas, Pennsylvania, New York, Virginia, and Nevada. The SEC worked closely with the U.S. Attorney’s Office and the Federal Bureau of Investigation as the separate schemes were uncovered. The U.S. Attorney’s Office also announced criminal charges against the same individuals facing SEC civil charges.
According to the SEC, defendants perpetrated schemes involving the payment of undisclosed kickbacks to a pension fund manager in exchange for the fund’s purchase of restricted shares of stock in the various microcap companies. In other complaints the SEC alleges that defendants engaged in schemes involving an undisclosed bribe that was to be paid to a stock broker who agreed to purchase the microcap companies’ stock in the open market for his customers’ discretionary accounts. In other complaints, the SEC alleges that the defendants engaged in schemes involving both an undisclosed kickback and bribe.
The defendants in the schemes involving undisclosed kickbacks understood they needed to disguise the kickbacks as payments to phony consulting companies, which they knew would perform no actual work. They also knew the fund manager owed a fiduciary duty to the fund. In the schemes involving the undisclosed bribes, the SEC alleges that the defendants knew their illegal activities were meant to artificially inflate the companies’ stock volume and prices.
The SEC’s complaints allege the defendants violated Section 17(a)(1) of the Securities Act, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and/or 10b-5(c) thereunder. The SEC is seeking permanent injunctions, disgorgement plus prejudgment interest, and financial penalties against all the defendants; penny stock bars against all the individual defendants, and officer-and-director bars against defendants Skwara, Hague, Cimino, Bonenberger, Brennan, and Haire.