Post by soonerlew on Feb 11, 2008 19:57:20 GMT -5
sandgoat posted this on 66......
The SEC has settled its enforcement action against attorney Kenneth Christison of Mill Valley, California. It had charged him with facilitating a multi-million dollar fraud by issuing a series of bogus legal opinion letters used in spam-fueled pump-and-dump scams.
In settling the charges, Christison consented to the entry of an order enjoining him from future violations of the federal securities laws.
"Today's action demonstrates that even after we stop those who profit from fraudulent schemes, we continue to pursue other individuals, especially attorneys and other gatekeepers who are enablers behind the scenes," said Linda Chatman Thomsen, Director of the SEC's Division of Enforcement. "Christison's connivance set the stage for swindlers to carry out an egregious fraud against investors."
In 2007, the Commission settled charges that Michael Paloma and Lawrence Kaplan had perpetrated an elaborate market manipulation scheme in which they unlawfully inflated the share prices of public seven microcap companies, then dumped millions of shares into the public market. They allegedly netted nearly $3 million in ill-gotten gains by touting the companies' shares in millions of bogus fax blasts and spam e-mails before selling off their own shares.
To settle those charges, Paloma agreed to pay more than $2.5 million in disgorgement and prejudgment interest. Kaplan agreed to more than $700,000 in disgorgement and prejudgment interest. The duo also consented to permanent injunctions from securities violations and penny stock bars. In addition they have plead guilty in federal court in Alexandria, Virginia, to charges of securities fraud, and face sentencing later this year.
The SEC charges that Paloma hired Christison to issue opinion-of-counsel letters on four occasions between May 1 and November 30, 2004. The letters allegedly claimed that the securities in question were exempt from the registration provisions of federal laws and that there were no restrictions on resale.
For example, in May 2004, Paloma directed the issuance of 12.75 million shares of stock of a company he controlled called Latin Heat Entertainment, Inc. The shares were issued without a restrictive legend pursuant to an opinion-of-counsel letter signed by Christison. That letter concluded that if the proposed purchasers qualified as accredited investors who purchased with investment intent, the offering was exempt from registration and there was no restriction on the resale of the securities issued.
Following the issuance of the securities, Paloma owned 100% of the stock, which he then began to sell to the public in unregistered, non-exempt transactions.
According to the Commission, in each of the four instances like this one, Christison knew that his opinion letter would contribute to Paloma's unregistered public distribution of securities through non-exempt transactions. The Commission further alleged that Christison, in fact, possessed documents and other information signaling Paloma's intent to conduct unlawful distributions by ultimately selling the securities into the public marketplace.
"Christison's opinion letters not only caused registration violations, but were an essential part of the scheme to get purportedly 'free trading' shares into the hands of fraudsters intent on using spam to fuel pump-and-dump schemes," Cheryl Scarboro, Associate Director of the SEC's Division of Enforcement, said.
Paloma and Christison had worked together prior to the scam. In August 2002, Paloma settled a Commission district court action and was permanently enjoined from violating federal securities laws, barred from acting as an officer or director of a public company, and ordered to pay more than $500,000 in disgorgement. Christison served as Paloma’s counsel in that case
www1.cchwallstreet.com/ws-portal/content/news/container.jsp?fn=02-11-08
The SEC has settled its enforcement action against attorney Kenneth Christison of Mill Valley, California. It had charged him with facilitating a multi-million dollar fraud by issuing a series of bogus legal opinion letters used in spam-fueled pump-and-dump scams.
In settling the charges, Christison consented to the entry of an order enjoining him from future violations of the federal securities laws.
"Today's action demonstrates that even after we stop those who profit from fraudulent schemes, we continue to pursue other individuals, especially attorneys and other gatekeepers who are enablers behind the scenes," said Linda Chatman Thomsen, Director of the SEC's Division of Enforcement. "Christison's connivance set the stage for swindlers to carry out an egregious fraud against investors."
In 2007, the Commission settled charges that Michael Paloma and Lawrence Kaplan had perpetrated an elaborate market manipulation scheme in which they unlawfully inflated the share prices of public seven microcap companies, then dumped millions of shares into the public market. They allegedly netted nearly $3 million in ill-gotten gains by touting the companies' shares in millions of bogus fax blasts and spam e-mails before selling off their own shares.
To settle those charges, Paloma agreed to pay more than $2.5 million in disgorgement and prejudgment interest. Kaplan agreed to more than $700,000 in disgorgement and prejudgment interest. The duo also consented to permanent injunctions from securities violations and penny stock bars. In addition they have plead guilty in federal court in Alexandria, Virginia, to charges of securities fraud, and face sentencing later this year.
The SEC charges that Paloma hired Christison to issue opinion-of-counsel letters on four occasions between May 1 and November 30, 2004. The letters allegedly claimed that the securities in question were exempt from the registration provisions of federal laws and that there were no restrictions on resale.
For example, in May 2004, Paloma directed the issuance of 12.75 million shares of stock of a company he controlled called Latin Heat Entertainment, Inc. The shares were issued without a restrictive legend pursuant to an opinion-of-counsel letter signed by Christison. That letter concluded that if the proposed purchasers qualified as accredited investors who purchased with investment intent, the offering was exempt from registration and there was no restriction on the resale of the securities issued.
Following the issuance of the securities, Paloma owned 100% of the stock, which he then began to sell to the public in unregistered, non-exempt transactions.
According to the Commission, in each of the four instances like this one, Christison knew that his opinion letter would contribute to Paloma's unregistered public distribution of securities through non-exempt transactions. The Commission further alleged that Christison, in fact, possessed documents and other information signaling Paloma's intent to conduct unlawful distributions by ultimately selling the securities into the public marketplace.
"Christison's opinion letters not only caused registration violations, but were an essential part of the scheme to get purportedly 'free trading' shares into the hands of fraudsters intent on using spam to fuel pump-and-dump schemes," Cheryl Scarboro, Associate Director of the SEC's Division of Enforcement, said.
Paloma and Christison had worked together prior to the scam. In August 2002, Paloma settled a Commission district court action and was permanently enjoined from violating federal securities laws, barred from acting as an officer or director of a public company, and ordered to pay more than $500,000 in disgorgement. Christison served as Paloma’s counsel in that case
www1.cchwallstreet.com/ws-portal/content/news/container.jsp?fn=02-11-08