DD Support Board and Research Team

[scion]

After an investigation, the Division of Enforcement alleges that:

1. This proceeding concerns a scheme to create sham public shell companies by Briner, a Canadian attorney and recidivist, and various legal and accounting professionals who provided opinion letters or audit reports in furtherance of the scheme. This scheme resulted in the filing of Form S-1 registration statements by twenty issuers, with each registration statement containing material misrepresentations and omissions in violation of Section 17(a) of the Securities Act.

2. According to their registration statements, each issuer purported to be an exploration stage mining company that had not begun any mining activity, had no revenue, was solely controlled and governed by a single officer, was capitalized by its officer’s purchase of issuer stock for $30,000, and had purchased mineral claims from an entity named Jervis Explorations Inc. (“Jervis”).

3. These statements were false. Briner—not the named officers—controlled the issuers. Briner also controlled Jervis, which was not identified as a related party in the Form S-1s. None of the officers provided any funds to purchase issuer stock. And Jervis never transferred any of the allegedly purchased mineral claims to the issuers.

4. In late 2011 and 2012, Dalmy, an attorney, provided opinion letters for eighteen of the twenty issuers at Briner’s request. Each letter stated that Dalmy “investigated” and “examined” the issuer, including reviewing relevant documents. But Dalmy did no investigations. Instead, Dalmy simply supplied electronically signed opinion letters to Briner, who then filed them along with the issuers’ registration statements.

5. In late 2011, Briner also contacted De Joya and M&K, registered public accounting firms, to audit the issuers’ financial statements. The audits that these firms conducted were so deficient that they amounted to no audits at all. The De Joya and M&K partners also ignored red flags with respect to the issuers.
6. For these reasons, Respondents violated Section 17(a) of the Securities Act and respondents De Joya, Arthur De Joya, Griffith, Whetman, Zhang, M&K, Manis, Ridenour, and Ortego engaged in improper professional conduct within the meaning of Rule 102(e) of the Commission’s Rules of Practice.


SEC order - Briner, et al
http://www.sec.gov/litigation/admin/2015/33-9699.pdf