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Showing posts with label ALLEGED FRAUDULENT SALES. Show all posts
Showing posts with label ALLEGED FRAUDULENT SALES. Show all posts

Thursday, August 29, 2013

SEC CHARGES PRINCIPAL OF MEDICAL BUSINESS FOR ROLE IN FRAUD SCHEME

FROM:  SECURITIES AND EXCHANGE COMMISSION 
SEC Charges Principal of Purported Biomedical Company with Fraud

The Securities and Exchange Commission ("Commission") filed a civil injunctive action on August 19, 2013 in the United States District Court for the Southern District of Indiana relating to Timothy E. Cook's fraudulent offer and sale of shares in his purported biomedical company, Xytos, Inc. (Xytos). The Commission charged Cook, of Indianapolis, and Xytos, a Nevada corporation based in Indianapolis, with securities fraud for engaging in a fraudulent scheme that garnered Cook more than $500,000 in illicit profits. The Commission also charged Cook and Asia Equities, Inc., a Nevada corporation Cook controlled, with related registration violations.

The Commission's complaint alleges that, between 2010 and March 2013, Cook misrepresented Xytos to the investing public as an operational biomedical company specializing in cancer treatment. Meanwhile, according to the compliant, Cook sold millions of his own Xytos shares on the open market and lived off the more than $400,000 in proceeds from those fraudulent sales.

The Commission's complaint alleges that Cook also raised over $100,000 from several private offerings of Xytos shares. The complaint further alleges that Cook, after soliciting private investors with false and misleading offering documents, misappropriated investor money to pay for personal expenses such as clothing and entertainment. Additionally, the complaint alleges that Cook concealed his fraud from Xytos shareholders through a series of misleading shareholder updates.

The Commission's complaint alleges that Cook and Xytos violated the antifraud provisions of the securities laws in Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933 (Securities Act); that Cook aided and abetted these violations; and that Cook is liable for the Exchange Act violations as a control person of Xytos. Finally, the complaint alleges that Cook and Asia Equities engaged in unregistered offerings in violation of Section 5(a) and 5(c) of the Securities Act. The Commission's complaint seeks permanent injunctions, civil penalties, disgorgement and prejudgment interest against all defendants. As to Cook, the complaint also seeks penny stock and officer and director bars.

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