SEC ALLEGES uRGENT CORPORATION RAN A BOILER ROOM FRAUD

Many small investors dream of have a big payoff if they could just get in on the right deal at the right time. There are of course people who will target such investors with scams such as amazing real estate development deals or perhaps an initial public offering of a stock. Certainly, if you could have purchased some Microsoft stock before the company became public you could have become very wealthy. Unfortunately, such deals are usually reserved for investment bankers and small investors have very little chance of investing in any legitimate profitable company when it is on the verge of becoming public. I remember when a Mutual Savings and Loan company that I had an account with offered to sell stock to its staff and account holders just before the firm became a publicly traded entity. I did not buy stock because I thought the company had questionable loan practices. For sure the company went public and within two years it was insolvent. The stock price never moved much above the IPO price which was not much different than the price paid for the stock before the offering.

In the following case the SEC alleges that mUrgent Corporation ran a high pressure boiler room operation to sell stock in the company prior to an imminent initial public offering:

“On April 21, 2011, the Securities and Exchange Commission filed a complaint in the United States District Court for the Central District of California against mUrgent Corporation, Vladislav Walter Bugarski (Walter), and his twin sons Vladimir Boris Bugarski (Boris) and Aleksander Negovan Bugarski (Aleks). The SEC alleges that the defendants defrauded investors in a $10 million boiler room scheme.

The SEC alleges that mUrgent, chief executive officer Boris Bugarski, chief financial officer Walter Bugarski, and chief operating officer Aleks Bugarski operated a boiler room at the company to sell mUrgent stock. Boiler room employees cold-called investors, used high pressure sales tactics, and misrepresented to investors that mUrgent had a prospering business and would imminently conduct an initial public offering (IPO). The SEC also alleges that mUrgent and the Bugarskis falsely told investors that stock sale proceeds would not be used to pay cash salaries to the Bugarskis.

According to the SEC’s complaint, mUrgent and the Bugarskis conducted two unregistered securities offerings beginning in 2008 that raised nearly $10 million from at least 130 investors nationwide. The Bugarskis misused investor money to fund more than $1.3 million in cash salary and bonuses for themselves. They also established a separate “slush fund” of more than $500,000, and used investor funds to pay for luxury cars and other personal expenses.

The SEC seeks permanent injunctions against mUrgent and the Bugarskis for violations of the antifraud, offering registration, and broker registration provisions of the federal securities laws, disgorgement, civil penalties, and an order prohibiting the Bugarskis from serving as officers or directors of any public company.
As alleged in the SEC’s complaint, the defendants violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a)(1) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.”