FROM: U.S. SECURITIES AND EXCHANGE DEPARTMENT
The Securities and Exchange Commission ("Commission") announced today that the Honorable Roy B. Dalton, Jr. of the United States District Court for the Middle District of Florida entered final judgments against each of the five defendants in this case: Christel S. Scucci ("Scucci"), her mother Karen S. Beach ("Beach"), their companies Protégé Enterprises, LLC ("Protégé") and Capital Edge Enterprises, LLC ("Capital Edge"), and their attorney Cameron H. Linton, Esq. ("Linton"). The Commission’s complaint, filed on April 30, 2012, charged the defendants with a scheme to unlawfully acquire and sell shares of penny stock that were never registered for sale to the public, in violation of Section 5 of the Securities Act of 1933 ("Securities Act").
The final judgments imposed the relief detailed below:
On September 14, 2012, the Court entered a final judgment by consent as to defendant Linton: (1) permanently enjoining him from violating Section 5 of the Securities Act, (2) permanently enjoining him from providing professional legal services to any person in connection with the offer or sale of securities pursuant to, or claiming, an exemption under Securities Act Rule 144, or any other exemption from the registration provisions of the Securities Act, including, without limitation, participating in the preparation of any opinion letter relating to such offerings, (3) permanently barring him from participating in an offering of penny stock, and (4) ordering him to pay $13,750, including disgorgement of $6,250, and a civil penalty of $7,500. Linton consented to the entry of the final judgment without admitting or denying the allegations of the complaint.
In addition, Linton agreed to the issuance of a Commission order, pursuant to Rule 102(e) of the Commission’s Rules of Practice, suspending him from appearing or practicing before the Commission as an attorney, based on the entry of the injunction from violations of Section 5 of the Securities Act. In the Matter of Cameron H. Linton, Esq., Exchange Act Release No. 67912, September 21, 2012.
On November 5, 2012, the Court entered final judgments by default as to defendants Beach, Capital Edge, and Protégé: (1) permanently enjoining them from violating Section 5 of the Securities Act, (2) permanently barring them from participating in an offering of penny stock, (3) ordering Beach and Capital Edge to pay, jointly and severally, disgorgement and prejudgment interest totaling $268,936.73, ordering each to pay a civil penalty of $30,000, and (4) ordering Protégé to pay disgorgement and prejudgment interest totaling $1,419,143.16, and a civil penalty of $52,500.
On November 8, 2012, the Court entered a final judgment as to defendant Scucci: (1) permanently enjoining her from violating Section 5 of the Securities Act; (2) permanently barring her from participating in an offering of penny stock, and (3) ordering her to pay, jointly and severally with Protégé, disgorgement and prejudgment interest totaling $1,419,143.16, and to pay a civil penalty of $52,500. Scucci consented to the injunction and penny stock bar without admitting or denying the allegations of the complaint.
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
The Securities and Exchange Commission announced today that on October 18, 2012, the Honorable Sandra J. Feuerstein of the U.S. District Court for the Eastern District of New York entered a final judgment against two brothers, Mayer Amsel and David Amsel, following a bench trial in a market manipulation case involving the securities of a company known as East Delta Resources Corp.
The final judgment orders the Amsels to pay, on a joint and several basis, $936,780.46 in disgorgement and $326,631.17 in prejudgment interest. In addition, Mayer Amsel was ordered to pay a civil money penalty of $455,000, and David Amsel was ordered to pay a civil money penalty of $715,000.
Besides monetary remedies, the judgment also provides injunctive relief. The Amsels were permanently enjoined from violating Section 10(b) of the Securities Exchange Act of 1934; Exchange Act Rule 10b-5; and Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933. The judgment likewise permanently enjoins both men from participating in any offering of penny stock and any activities to induce the purchase or sale of any penny stock. David Amsel was permanently enjoined from aiding and abetting violations of Section 13(a) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, and 13a-13. David Amsel was also enjoined from serving as an officer or director of a publicly held company for eight years from September 7, 2012.
The SEC charged the Amsels in January 2010, alleging that together they garnered more than $1 million in illegal profits when they conducted unlawful wash sales and matched sales of unregistered East Delta shares. All of the SEC’s claims against the Amsels were resolved in the SEC’s favor via summary judgment, at trial, or through two post-trial rulings. All of the findings in the court’s summary judgment ruling and post-trial rulings were incorporated into the final judgment.
The court found on summary judgment that the Amsels violated Section 10(b) of the Exchange Act and Section 17(a) of the Securities Act when they executed fraudulent wash sales and matched sales, and that David Amsel aided and abetted East Delta’s violation of Section 13(a) of the Exchange Act when he prepared certain SEC filings for East Delta. Based upon the evidence presented at trial, the court found that both Amsels also violated Sections 5(a) and 5(c) of the Securities Act by selling unregistered East Delta shares, notwithstanding the existence of a Form S-8 registration statement and consulting agreement associated with Mayer Amsel’s stock. Significantly, the court found the Form S-8 ineffective for registration purposes because the "primary character" of Mayer Amsel’s consulting role at East Delta was capital-raising and promotional and thus contrary to the eligibility requirements for effective Form S-8 registration.
The SEC’s case was litigated by Frederick Block, Assistant Chief Litigation Counsel and Danette Edwards, Senior Counsel. The investigation prior to the litigation was led by Stephen Herm, David Neuman, Senior Investigations Counsel, and Gregory Faragasso, Assistant Director.
The SEC appreciates the assistance of the Quebec Autorité des marchés financiers (AMF) and the British Columbia Securities Commission (BCSC) in connection with the investigation leading to the litigation.
Posts
