SEC GETS JUDGMENTS IN CHINA VOICE HOLDINGS CORP. ALLEGED PONZI SCHEME

October 4, 2011 The following excerpt is from the SEC website: “On October 4, 2011, the Securities and Exchange Commission announced that the Honorable Reed O’Connor, United States District Judge for the Northern District of Texas, recently entered orders permanently enjoining multiple defendants in a case involving the co-founder of China Voice Holding Corp. Without admitting or denying the allegations in the Commission’s complaint, Alex Dowlatshahi and Christopher Mills consented to the entry of judgments that permanently enjoin them from violating Sections 5(a), 5(c), and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. In addition, companies owned and controlled by Dowlatshahi and Mills, including Defendants Integrity Driven Network Corp., Lucrative Enterprises Corp., Synergetic Solutions LLC, Silver Summit Holdings LLC, and Sleeping Bear LLC, were permanently enjoined from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The judgments also provide that upon motion of the Commission, the Court may order disgorgement of ill-gotten gains, prejudgment interest thereon, and civil penalties in amounts the Court deems appropriate. The judgments were entered on August 31, 2011, and September 19, 2011. On September 23, 2011, Defendant Ilya Drapkin was permanently enjoined from violating Section 17(a)(3) of the Securities Act. In addition the judgment permanently bars Drapkin from participating in the offer or sale of penny stocks and provides that, upon motion of the Commission, the Court shall order disgorgement of ill-gotten gains, prejudgment interest thereon, and civil penalties in amounts the Court deems appropriate. Drapkin’s companies, Defendants MG TK Corp. and SMI Chips, Inc., also shall be ordered to pay disgorgement of ill-gotten gains and prejudgment interest in amounts the Court deems appropriate upon motion of the Commission. The Defendants consented to the entry of the judgment without admitting or denying the allegations in the Commission’s complaint. On September 26, 2011, Defendant Gerald Patera, and his companies, Defendants Capital Bankers Group Ltd. and Third Securities Corp., were permanently enjoined from violating Section 17(a) of the Securities Act and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder. In addition, the judgment permanently bars Patera from participating in the offer or sale of penny stocks and provides that, upon motion of the Commission, the Court shall order disgorgement of ill-gotten gains, prejudgment interest thereon, and civil penalties in amounts the Court deems appropriate. The Defendants consented to the entry of the judgment without admitting or denying the allegations in the Commission’s complaint. The Commission filed an emergency action on April 28, 2011, alleging that China Voice’s co-founder and former Chief Financial Officer, David Ronald Allen, with the assistance Dowlatshahi and Mills, and numerous related entities, launched what became a Ponzi scheme that sought to raise at least $8.6 million from investors across the country. The Commission alleged that, contrary to what investors were told, proceeds were used to pay back earlier investors; to make payments to Allen, Dowlatshahi, and Mills; and to make payments to Allen-affiliated business, including China Voice. On June 5, the Honorable Judge Reed O’Connor, United States District Judge, entered a preliminary injunction, which, along with freezing the assets of multiple defendants and relief defendants, prevents the defendants from violating certain provisions of the securities laws, orders the preservation of documents, and requires the defendants to provide an accounting to determine the disposition of investor funds. The SEC’s complaint also charges China Voice, its former chairman and CEO William Burbank IV, and Allen for a series of fraudulent statements about China Voice’s financial condition and business prospects, as well as Patera, Drapkin, and Robert Wilson for their roles in the scheme. The Commission’s case is still pending against remaining defendants Allen, Burbank, Wilson, China Voice, and various of their related entities.”

SEC BRINGS ADDITIONAL FRAUD CHARGES AGAINST CO-FOUNDER OF CHINA VOICE HOLDING

Below is an additional release by the SEC regarding China Voice Holding. The following is and excerpt from the SEC website:

"On June 20, 2011, the Commission filed an amended complaint in the U.S. District Court for the Northern District of Texas (Dallas Division) in its case against the co-founder of China Voice Holding Corp., David Ronald Allen, and multiple other defendants. The SEC’s amended complaint charges China Voice, Allen, and William F. Burbank IV (China Voice’s former chairman and CEO) with reconstituting former subsidiaries of China Voice at Voice One Corp. without informing China Voice investors.
On April 28, 2011, the SEC filed a complaint in federal court in Texas, alleging that Allen, Burbank, and China Voice engaged in a series of false and misleading statements and material omissions to investors about China Voice’s financial condition. Today’s complaint alleges that this fraudulent behavior extended to renaming two China Voice subsidiaries and reconstituting them at Voice One and that Allen and Burbank are now involved in running Voice One.
Also as alleged in the SEC’s original complaint, Allen, with the assistance of two associates, launched what became an ongoing fraud that sought to raise at least $8.6 million from investors, telling them that their funds would be used to make loans to profitable businesses with demonstrated track records. The Commission alleged that contrary to what investors were told, proceeds were used to pay back earlier investors; to make payments to Allen and his associates; and to make payments to Allen-affiliated businesses, including China Voice. Today’s amended complaint alleges that Allen also used investor funds to make payments to Voice One, contradicting the disclosures made to investors. The amended complaint also names as a defendant yet another company used by Allen to help carry out the fraud on investors.
The SEC’s amended complaint charges Allen, Alex Dowlatshahi, Christopher Mills, and various related companies with violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC’s amended complaint also charges China Voice, Burbank, and Allen for a series of fraudulent statements about China Voice’s financial condition and business prospects, as well as Gerald Patera, Ilya Drapkin, and Robert Wilson for their roles in the scheme, including violations of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder. In addition to the preliminary relief, the SEC’s amended complaint seeks permanent injunctions, disgorgement, prejudgment interest, and financial penalties against all defendants, as well as penny stock bars against Allen, Burbank, Patera, Drapkin, and Wilson, and officer and director bars against Allen and Burbank.
The SEC’s investigation is ongoing."

SEC INJUNCTION AGAINST DEFENDANTS IN CHINA VOICE HOLDING CORPORATION CASE

The following is an excerpt from the SEC website:

“On June 5, 2011, the Securities and Exchange Commission obtained a preliminary injunction against multiple defendants in a case involving the co-founder of China Voice Holding Corp. The Commission also received additional relief it sought, including an order freezing the assets of multiple defendants and relief defendants.
The Commission filed an emergency action on April 28, 2011, alleging that China Voice’s co-founder and former Chief Financial Officer, David Ronald Allen, with the assistance of two associates, Alex Dowlatshahi and Christopher Mills, and numerous related entities, launched what became an ongoing fraud that sought to raise at least $8.6 million from investors across the country. The Commission alleged that, contrary to what investors were told, proceeds were used to pay back earlier investors; to make payments to Allen, Dowlatshahi, and Mills; and to make payments to Allen-affiliated business, including China Voice.
On June 5, the Honorable Judge Reed O’Connor, United States District Judge, entered a preliminary injunction, which, along with freezing the assets of multiple defendants and relief defendants, prevents the defendants from violating certain provisions of the securities laws, orders the preservation of documents, and requires the defendants to provide an accounting to determine the disposition of investor funds.
The SEC’s complaint charges Allen, Dowlatshahi, Mills, and various related companies with violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC’s complaint also charges China Voice, its former chairman and CEO William Burbank IV, and Allen for a series of fraudulent statements about China Voice’s financial condition and business prospects, as well as Gerald Patera, Ilya Drapkin, and Robert Wilson for their roles in the scheme, including violations of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder. In addition to the preliminary relief, the SEC’s complaint seeks permanent injunctions, disgorgement, prejudgment interest, and financial penalties against all defendants, as well as penny stock bars against Allen, Burbank, Patera, Drapkin, and Wilson, and officer and director bars against Allen and Burbank“.

SEC HAS ASSETS FROZE AT CHINA VOICE HOLDING CORP.

Whenever rates of returns are offered to investors which are too good to be true guess what? Usually the investor is being set up to have his money stolen. After decades as both an investor and investment salesman I will always be amazed at how people who are really cautious about putting up money for an investment that earns a descent rate of return but, those same cautious investors will throw all into a game which promises rates of return which are more like gambling winnings than rates of return from an honest investment. In the following excerpt from the SEC web site the SEC alleges that a multi-million dollar Ponzi scheme was perpetrated on investors who thought they were going to earn a very large rate of return:

“Washington, D.C., April 29, 2011 — The Securities and Exchange Commission today announced that it has obtained a court order freezing the assets of China Voice Holding Corp., which trades in over-the-counter markets and has claimed to have a portfolio of telecommunications products and services in both the U.S. and China. The SEC alleges that China Voice's co-founder and his two associates are operating an $8.6 million Ponzi scheme and misusing its proceeds, in part, to help fund the company's operations.

The SEC alleges that David Ronald Allen, who also was China voice's chief financial officer, and his associates Alex Dowlatshahi and Christopher Mills promised investors in a series of offerings of limited partnerships that they would earn returns of at least 25 percent on their investments. Investors were falsely told that their money would be loaned to companies with a demonstrated track record and large profit margins. Instead, Allen and his cohorts used investor funds to pay back investors in earlier partnerships and funneled investor money to China Voice and a complicated web of other companies that Allen controls. Allen and his associates also siphoned investor money to enrich themselves and family members.
In order to maintain the scheme, Allen and his associates have increased the pace and size of the offerings to obtain a steady stream of proceeds from defrauded investors. They are planning or have begun to solicit funds from investors in at least two more limited partnerships in the ongoing fraud. The court order obtained late yesterday freezes the assets of Allen and several others in addition to China Voice. The court also temporarily enjoined these defendants from participating in the offering of securities like those used to perpetrate the fraudulent scheme as alleged by the SEC.
"These promoters falsely touted what they claimed to be a prudent investment with reliable returns through loans made to carefully selected businesses," said Stephen L. Cohen, Associate Director of the SEC's Division of Enforcement. "This fraud illustrates that when extraordinarily high returns are promised in a supposedly low-risk investment, that's a tell-tale sign that something likely is amiss."
In addition to the Ponzi scheme, the SEC's complaint filed in U.S. District Court for the Northern District of Texas (Dallas Division) charges China Voice, its former chairman and CEO William F. Burbank IV, and Allen, for a series of fraudulent company statements about its financial condition and business prospects. Among other things, the SEC alleges that China Voice greatly overstated the value of certain business relationships and misled investors by failing to disclose significant loans from related parties needed to fund its operations.
The SEC also alleges that beginning in at least September 2006, China Voice overstated its business in China by claiming to provide telephone and other communications software in China on a much more extensive basis than it actually did. Company press releases and public filings extensively publicized contracts signed by Chinese subsidiaries to provide services to the government and other entities in China, which would provide high levels of projected revenue to the company. But the company recanted in audited financial statements in June 2008, when it disclosed that the majority of the company's revenue came from its U.S. subsidiaries. Nevertheless, China Voice and its stock promotion campaigns continued to tout purported Chinese contracts.
The SEC's complaint additionally charges two China Voice shareholders, Gerald Patera and Ilya Drapkin, for helping Allen finance stock promotion campaigns to pump up the company's stock price. These campaigns included a blast fax campaign orchestrated by Robert Wilson, who also is charged in the SEC's complaint. The spam faxes were sent to thousands of people at once and contained false and misleading statements about China Voice and who was paying for the faxes. At the same time they were spending more than a million dollars on stock promotion, Patera and Drapkin dumped millions of shares of the company into the market.
The SEC's complaint charges Allen, Dowlatshahi, Mills, and various related companies with violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and seeks a temporary restraining order, preliminary and permanent injunctions, disgorgement of unlawful proceeds plus prejudgment interest, and a financial penalty. The SEC's complaint charges Burbank, Patera, Drapkin, and Wilson with violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder for their roles in the scheme. With regard to them, the SEC seeks a permanent injunction, disgorgement of unlawful proceeds plus prejudgment interest, and a financial penalty. The SEC's complaint also seeks penny stock bars against Allen, Burbank, Patera, Drapkin, and Wilson as well as officer and director bars against Allen and Burbank.”