SEC Charges Ronald Feldstein for Role in Facilitating Fake Investment in Penny Stock Company

SEC v. Ronald Feldstein.   On July 25, 2012, the SEC filed a complaint against Ronald Feldstein.  The suit stems from the role played Feldstein played in the disclosure of materially misleading information by Interlink-US-Network, Ltd. (“Interlink”) and its officers concerning a purported $6 million investment in Interlink, a publicly-traded company with no business operations and liabilities that exceeded assets by over $2 million.  The investment, if real, would have provided the struggling company with a much-needed capital infusion.  In October 2010, Interlink’s management recruited Feldstein to act as the investor.  Feldstein, pretending to be the President of LED Capital Corp., a privately-held company with no business operations and no assets, entered into an agreement with Interlink concerning the purported investment.  Feldstein, however, had no position at, or affiliation with, LED Capital Corp.  In this agreement, Feldstein purported to commit LED Capital Corp. to purchase 1.2 million shares of Interlink common stock for $6 million.  At the time, however, Interlink shares traded just below $1 per share, and 1.2 million shares were worth approximately $1.1 million, or approximately $4.9 million less than the contract price.  Although Feldstein was in regular contact with the owner of LED Capital Corp., he did not inform the owner of the purported contract committing LED Capital Corp. to pay more than a 500% premium for a minority block of shares in a company that had liabilities exceeding its assets seven times over.  When Interlink sought to inform the market of this remarkable news, Feldstein again offered crucial assistance by reviewing and contributing to a draft Form 8-K of Interlink’s that disclosed the purported agreement with LED Capital Corp.  On December 14, 2010, Interlink filed a version of the Form 8-K that reflected Feldstein’s comments.  For his performance as the President of LED Capital Corp., Interlink awarded Feldstein shares of its common stock that, at the time, had a market value of over $400,000.  Feldstein is charged with aiding and abetting violations of Section 10(b) and 13(a) of the Exchange Act and Rules 10-b5(b), 12b-20 and 13a-11 thereunder.  The Commission seeks civil monetary penalties, disgorgement with prejudgment interest, and injunctive relief

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