SEC CHARGES MICROCAP PROMOTER WITH ILLEGALLY SOLD PENNY STOCK USING OFFSHORE FRONT COMPANIES

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

06/23/2015 04:55 PM EDT

The Securities and Exchange Commission charged a microcap promoter with illegally selling more than 83 million penny stock shares that he secretly obtained through at least 10 different offshore front companies.

According to the SEC’s complaint filed in U.S. District Court for the Eastern District of New York, Gregg R. Mulholland surreptitiously accumulated at least 84 percent of the issued and outstanding shares of Vision Plasma Systems Inc.  Once he effectively controlled the company through this majority ownership, Mulholland liquidated his shares for proceeds of at least $21 million.  No registration statement was filed or in effect covering Mulholland’s sales, and no exemption from registration was available.

In a parallel action, the U.S. Attorney’s Office for the Eastern District of New York today announced criminal charges against Mulholland.

“Mulholland’s intricate web of offshore entities failed to hide his alleged illicit sales,” said Stephen L. Cohen, Associate Director in the SEC’s Division of Enforcement.  “We are committed to holding accountable those who abuse the microcap markets, regardless of the elaborate steps they take to conceal their misconduct.”

According to the SEC’s complaint, Mulholland lives in Canada and was previously charged by the SEC in 2011 for the fraudulent pump-and-dump manipulation of a sports drink company founded by Daniel “Rudy” Ruettiger, known for having inspired the motion picture “Rudy.”  In 2013, the SEC obtained a monetary judgment against Mulholland for more than $5.3 million in disgorgement, prejudgment interest, and penalties that remains unpaid.

The SEC’s complaint charges Mulholland with violating Sections 5(a) and 5(c) of the Securities Act of 1933.  

The SEC’s continuing investigation is being conducted in coordination with the Microcap Fraud Task Force by John P. Lucas and Andrew R. McFall.  The case is being supervised by J. Lee Buck II, and will be litigated by Derek Bentsen and Michael J. Roessner.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the Eastern District of New York, Federal Bureau of Investigation, Internal Revenue Service, Department of Homeland Security, and Financial Industry Regulatory Authority.