Spencer Pharmaceutical (SPPH)

[scion]

DEFENSE by : MAXIMILIEN ARELLA

PRELIMINARY STATEMENT

1. I totally deny all of the allegations made by the SEC as presented in their document since they wrongly implicate me in a pump-and-dump scheme

2. The way the SEC is presenting my implication in this case is wrong and is full of mistakes.

3. I realize today that my scientific experience and my projects were used against my will in a possible pump-and-dump scheme

4. I have not participated voluntarily or knowingly in this pump-and-dump scheme as described by the SEC. I may have been naive in some circumstances but I can solemnly reaffirm that never took advantage of any sale of shares either directly or indirectly

5. During all my career as a scientist I developed a diversified expertise in pharmaceutical products development and by joining the company (Spencer Pharmaceuticals) my intention was to develop products based on my network of contacts in the science and technology sector related to my previous experience. I was assured by Mr Amyot and all of his co-workers and colleagues that they were raising working capital to sustain the R & D that I was developing with well known researchers. I strongly reject the assertion made by the SEC that the company had no valid technology.

6. During my tenure as CEO of the company I took reasonable precautions in order to make sure that all of the governing of the company was done properly. All of the science-related press-releases were reviewed by the collaborating professors and the legal Department of the Universities, when the buy-out offer was received I asked to include in the body-text of the release and not only in the disclaimer that we were surprised but also starting a due-diligence, I hired consultants and investigate the people behind the proposal, hired a consultant working as a full­ staff of the Canadian Senate, asked the i.d. of the person representing the Kuwait company (Mr Hussein Al-Awaid), asked to meet and discuss the transaction with a lawyer designated by the offeror.

7. All the Press-Releases were published only after they were reviewed with the proper information by a lawyer (Mr J. Emas) that also participated in all of the meetings of our board. Mr Emas was paid to advice us also during the due­ diligence period when we submitted a certain number of documents to the Al­ Dorra-Hail-First-Phrma designated lawyer. A copy of these documents (thousands of pages) were sent to the SEC at the request of Mrs Amy Gwidza in the spring-summer of 2011.

8. I was later informed, approximately at the end of spring of 2011, that the lawyer advising Spencer was also involved in previous business transactions with Mr Amyot.

9. I have always conducted the business of the company in good faith and giving priority to the interests of the company and of the shareholders. I brought in the company real and credible R & D projects and when the transaction was concluded with the public company I had the insurance by Mr Amyot and his many collaborators in his office that the investors in the public shell offered (Spencer Pharmaceutical) were going to invest sufficient funds to bring the projects to the next level of development that would allow out-licensing agreements with major Pharmaceuticals companies.

10. All of the press-releases and public information disseminated by the company were based on documents and facts (written messages, letters an faxes) and confirmed by a certain number of credible people (for instance the Middle-East connection was brought by a member of the Canadian Senate and Mr Amyot was always mentioning his tight links with the Canadian government (Ministers and Senators). I verified personally this link since I actually met in person in the office of Mr Amyot with one of the top political organizers (Mr Pierre Coulombe) of the Prime Minister of Canada and two prominent senators (Senator Larry Smith and Senator Leo Housakos) that spoke highly of Mr Amyot during a private political fund-raising dinner in March 2011.

11. With the only exception of a minimal part of a salary that I received during my tenure as CEO of the company (only about 30% approximately of the salary agreed upon by contract) I never took any other personal gain from my position as the business and the scientific leader of the company. I actually continued to invest my time and my money to continue the operations of the company after the summer of 2011.

12. I never took any advantage or personal gain from selling shares as described by the SEC.

13. I never sold any shares of Spencer Pharmaceutical either directly or indirectly or by another person related or in conjunction with me.

14. I noticed that the volume of shares was higher than expected but I never taught that this was deliberately linked to manoeuvres as described in the SEC prosecution. However, I was aware, as allow by the laws, that the old shareholders of Spencer Pharmaceutical from the Reverse Take Over were legally allowed to sell their shares.

15. I never opened a bank or a brokerage account outside of Canada either directly or indirectly or through intermediaries and I never had such account either before or after the period of time covered by this investigation.

16. Although I questioned to Mr J. Emas about this transaction at its beginning and wanted to ask the authorities to investigate (and I was not encouraged to do so in early December 2010 ) I started to have more serious doubts about this transaction when I consulted a Canadian lawyer (Mr Claude Boulanger) at the beginning of 2011.

17. Starting in January 2011, I refused to sign documents (offers related to the buy­ out) that were presented by Mr Amyot and Mr Al-Awaid to replace the all cash buy-out to a share transaction with a supposedly another affiliate (Hail First Pharma). I asked more financial assurance about HFP, since I never received such assurance I rejected even the signature of a Letter-of-intent.

18. As of today, I am now under prosecution by the SEC as if I was an active participant in a pump-and-dump scheme and as if I was an important financial beneficiary of such a scheme.

19. In order to clearly establish the facts, as they happened, I will prepare and describe the facts as they occurred and my personal implication with a chronology of events that will be later submitted with supportive evidence of what I wrote in the above points.


OCR extract
Doc 7 PDF file
http://www.scribd.com/doc/136035469/SEC-v-Spencer-Pharmaceutical-Inc-Et-Al-Doc-7-19-Mar-13