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Monday, July 7, 2014

COURT IMPOSES MONETARY JUDGEMENT AGAINST ATTORNEY AND OTHERS FOR ROLES IN UNREGISTERED STOCK SALES

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION
Court Imposes Legal Services Bar Against Attorney, and Penny Stock Bars and Significant Monetary Relief Against All Defendants

On June 27, 2014, the U.S. District Court of Nevada issued an order imposing sanctions against an attorney, Marcus Luna, three other individuals - Nathan Montgomery, Adam Daskivich, and David Murtha - and their businesses for their roles in a multi-million dollar scheme to sell shares of Axis Technologies Group, Inc. stock in a public distribution without registration with the Commission. The Court's order:

Prohibits Luna from providing legal services to anyone in connection with the offer or sales of securities pursuant to, or claiming, an exemption under Regulation D.
Bars Luna, Montgomery, Daskivich and Murtha from participating in any offering of penny stocks.
Imposes disgorgement and prejudgment interest against:
Luna and St. Paul Venture Fund: $4.98 million
Montgomery and Minnesota Venture Capital: $2.51 million
Daskivich and Real Estate of Minnesota: $3.49 million
Murtha and Matrix Venture Capital: $1.72 million
Luna: joint and severally with other defendants: $2.39 million.
Imposes civil penalties against:
Luna and St. Paul Venture Fund: $2.03 million
Montgomery and Minnesota Venture Capital: $1.97 million
Daskivich and Real Estate of Minnesota: $2.73 million
Murtha and Matrix Venture Capital: $1.37 million
The court also denied the SEC's request for permanent injunctions for violations of the registration and fraud provisions of the federal securities laws, holding that the legal services and penny stock bars are sufficient.

The court previously granted the SEC's Motion for Summary Judgment on February 26, 2014, finding no genuine issues of material fact remained that the defendants each violated Section 5 of the Securities Act, and that Luna violated Sections 17(a)(1), (2), and (3) of the Securities Act, Section10(b) of the Exchange Act, and Rule 10b-5. The court then ordered the parties to further brief the issue of what remedies were appropriate given defendants' violations.

The Commission acknowledges the assistance of the Financial Industry Regulatory Authority.

This matter was litigated on behalf of the SEC by Anne Blazek and Timothy Leiman.

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