Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
New Link: http://www.thematteragroup.com/
Please e-mail me at springsparklie@gmail.com
Hello,
Did anyone have some information about these past scams being mention here: https://www.biv.com/article/2015/6/whos-getting-sued-june-23-2015/ and in particular related to Banark Partners LP, Sinowide Energy, Yen Linh Mach? Thanks!
Has anyone received any recent news regarding this case? I believe there was to be a hearing in June to see if they could schedule the trial, but I haven't heard any outcome of this. Thanks.
It seems they should have done better research on their lawyer. Lots of Trail losses for Carl Schoeppl.
SEC V Jerome M Winger- Guilty represented by Carl F. Schoeppl Trial Loss
http://www.sec.gov/litigation/aljdec/id192cff.htm
SEC V. Richard Campanella/V Finance-Guilty represented by Carl F. Schoeppl loss
http://www.sec.gov/litigation/aljdec/2008/id360rgm.pdf
US Commodity Future Trading v J. Aucella and G. Aucella represented by Carl F. Schoeppl-Trial Loss http://www.cftc.gov/ucm/groups/public/@lrenforcementactions/documents/legalpleading/enficexconsentorder091407.pdf
SEC V Melvin Ruth- Guilty represented by Carl F Schoeppl
http://www.usatoday.com/money/companies/regulation/2007-02-23-tax-havens-usat_x.htm
US Government V. Raymond Scott Stevens-Guilty represented by Carl F. Schoeppl –Guilty Sentenced to Prison
http://blogs.wsj.com/law/2006/12/04/former-tyco-taxman-sentenced-to-three-years-in-prison/
US Government v. Raymond Solo- Guilty represented by Carl F Schoeppl- Sentence indefinitely
http://articles.sun-sentinel.com/2010-01-22/news/1001210460_1_mr-solow-ordered-duck
Donald Boroian –Another Carl Schoeppl loss
http://www.bluemaumau.org/8081/boroian_attorney_responds_south_beach_jury_verdict
USA V Dominic Antonucci-Guilty Represented by Carl F. Schoeppl- http://docs.justia.com/cases/federal/district-courts/newyork/nysdce/1:2008cv00529/320238/7/0.pdf?1270815459
USA V Dana Williamson-Guilty represented by Carl F. Schoeppl
http://www.floridasupremecourt.org/decisions/2008/sc07-564.pdf
USA V Raymond Scott Stevenson- Guilty
http://www.tax-ews.com/news/Ex_Tyco_Tax_Chief_Jailed_For_Corporate_Tax_Evasion____25632.html
CFTC Complaint against David E. Howard II
http://www.courthousenews.com/2011/07/27/Commodities.pdf
https://viewer.zoho.com/docs/wbdbba1
CFTC vs David E. Howard II
http://www.cftc.gov/PressRoom/PressReleases/pr6083-11
CFTC Charges Susan G. Davis, David E. Howard II, Joseph Burgos, and their Companies with Fraud in Off-Exchange Foreign Currency Scheme
July 28, 2011
Federal court issues order freezing defendants’ assets and prohibiting destruction of books and records.
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today charged Susan G. Davis of Jersey City, N.J. and St. Petersburg, Fla., David E. Howard II of Woodstock, Ga., and their New York companies, Forex Capital Trading Group, Inc. (Forex Group) and Forex Capital Trading Partners, Inc. (Forex Partners), and Joseph Burgos of Rutherford, N.J., and his company, Highland Stone Capital Management, LLC (Highland Stone), with fraudulently soliciting more than $1.3 million from at least 73 customers to trade off-exchange foreign currency (forex) contracts. None of the defendants has ever been registered with the CFTC, except for Davis who has been registered as an Associated Person of a different company, Forex Capital Trading Partners NA, Inc., since May 31, 2011.
On July 27, 2011, the same day the complaint was filed, Judge Richard J. Holwell of the U.S. District Court for the Southern District of New York issued an emergency order freezing the defendants’ assets and prohibiting the destruction of books and records. A preliminary injunction hearing is set for August 11, 2011.
The CFTC complaint alleges that beginning in at least April 2009, Davis, Howard, Burgos, and their companies, Forex Group, Forex Partners, and Highland Stone, fraudulently solicited customers to trade forex through accounts that the defendants managed at one of two foreign retail forex dealers. In soliciting customers, the defendants allegedly falsely claimed incredible profits spanning several years on their firms’ respective websites and elsewhere. Forex Group’s and Forex Partners’ managed customer accounts allegedly lost a combined sum of $224,824 but they reported a 149.35 percent return for 2009. These companies’ customers allegedly lost a total of $736,241 through October 2010, yet the defendants reported gains of 51.94 percent for 2010. The defendants also allegedly provided prospective customers with purportedly verified account statements that falsely reported profitable results for past managed account customers, according to the complaint.
The defendants also allegedly falsely assured customers that Burgos was a successful forex trader and that customers’ accounts would be carefully managed by Burgos, Davis, and Howard to minimize the risk of loss. In fact, customers ultimately lost more than 86 percent of their overall invested principal through the forex trading, and between May 2009 and October 2010, customers’ accounts had losses in 78 percent of the months that defendants traded their accounts, according to the complaint.
In its continuing litigation, the CFTC seeks restitution to defrauded customers, rescission of contracts, disgorgement of ill-gotten gains, civil monetary penalties, trading and registration bans, and permanent injunctions against further violations of the anti-fraud provisions of federal commodities laws.
The CFTC appreciates the assistance of the U.K. Financial Services Authority.
The following CFTC Division of Enforcement staff members are responsible for this action: Susan B. Padove, Joy McCormack, Elizabeth Streit, Michael Geiser; Trevor Kokal; Janine Gargiulo; Scott Williamson, Rosemary Hollinger and Richard B. Wagner.
Media Contacts
Dennis Holden
202-418-5088
http://www.cftc.gov/PressRoom/PressReleases/pr6083-11
Fisker-Mattera Case Declaration
This is the Declaration of Matthew K. Paroly, Vice President and General Counsel of Fisker Automotive Holdings, Inc, formerly known as Fisker Holdings, Inc regarding share ownership in the matter of John Mattera and related parties and companies.
https://viewer.zoho.com/docs/uc6d5c
Stylish. These guys look more like Mafiosa than actual investment types.
Excellent Board, nodummy.
Thank you for starting it.
Persons with additional information (please no defamation) are urged to post it here. If they feel uncomfortable with that, or PM and/or e-mail, there are several journalists who may be contacted:
MIAMI:
Kevin Gale of the South Florida Business Journal
Adam Beasley of the Miami Herald
Long Island:
David Winzelberg of Long Island Business News
Vancouver, BC:
David Baines of The Vancouver Sun
Mike Caswell of Stockwatch
Thanks again, everyone, especially nodummy.
XEN IX Capital Ltd., Announces New Member to Board of Directors
FT. LAUDERDALE, Fla., Sept. 14, 2011 (GLOBE NEWSWIRE) -- XEN IX Capital Ltd., announces Shailesh Gupta, MD, MBA, FACS onto its Board Directors in the Division of Life Sciences. Dr. Gupta's training as an academic Vitreo-retinal surgeon and background managing healthcare organizations and advising international companies expanding into the healthcare sector will serve XEN IX Capital Ltd. well as it vets potential investments in the Life Sciences arena.
"The life sciences sector is a recognized area of rapid growth particularly in the fastest growing economic markets of the world. Innovative healthcare solutions, and advances in biotechnology combined with rapidly expanding and aging middle classes are some of the powerful trends leading to year over year double digit growth rates in Life Sciences in India, China, and South America. I am looking forward to working with The Board to take advantage of this emerging opportunity," said Dr. Gupta.
XEN IX Capital Ltd.'s investment criteria are streamlined and effective. They seek extraordinary teams, groundbreaking technologies, and competitive initial product and market success.
"Dr. Gupta's expertise comes from his dual overlapping background in clinical and academic medicine as well as operational, management, and fiscal experience in the business of national and international healthcare. His expansive view of life sciences fits in perfectly in our quest for a bigger piece of this rapidly growing pie," said XEN IX Capital Ltd.'s Managing Director, John Mattera.
About XEN IX Capital Ltd.
XEN IX Capital Ltd. is a private equity firm combining the disciplines of traditional private equity, venture capital, and related debt and lending strategies to provide business-building solutions to growing firms across nearly all industries. As one of the world's most agile investment teams, we have the ability to use our operational, investment, and market experience to provide a one stop solution for management teams at any point in their company's life cycle. Our vision is global; our partners international, our companies succeed.
For more information, please visit http://www.xenixcapital.com
About John Mattera:
John Mattera is currently the Chairman and CEO of The Mattera Reserve, Inc. a worldwide private equity firm with investments in 23 countries. Together with The Mattera Reserve's partners, the company has backed many of the world's best entrepreneurial leaders. John is also Chairman of the Board of XEN IX Capital Ltd., an investment firm combining the disciplines of traditional private equity, venture capital, and related debt and lending strategies to provide business-building solutions to growing firms across nearly all industries.
CONTACT: Lisa Yigit
ly@xenixcapital.com
Odd that Mattera had such a close relationship with one of the companies he was using to bilk investors
http://www.marketwatch.com/story/photo-release-much-anticipated-fisker-karma-luxury-hybrid-driving-event-to-take-place-in-palm-beach-florida-2011-08-29
Aug. 29, 2011, 3:09 p.m. EDT
Photo Release -- Much Anticipated Fisker Karma Luxury Hybrid Driving Event to Take Place in Palm Beach, Florida Avid Green-Tech Investor John Mattera Test-Drives Vehicle at Fisker Automotive's Palm Beach Dealership
FT. LAUDERDALE, Fla., Aug 29, 2011 (GlobeNewswire via COMTEX) -- According to John Mattera, a local South Florida businessman and green-tech investor, going green in 2011 has its perks. If the Fisker Karma is any indication, eco-friendly electric vehicles are sleek, sexy, high performance, and every bit as stylish as their luxury contemporaries, Mercedes-Benz, BMW, and Jaguar. Later this week, owners will finally get to test drive the illusive Karma, during an exclusive driving event in Palm Beach. As the Fisker Karma luxury hybrid makes its way into the hands of owners like Mattera after a three-year pre-sale, automotive enthusiasts and environmentalists agree that sustainability has never looked so chic.
A photo accompanying this release is available at http://www.globenewswire.com/newsroom/prs/?pkgid=10374
The Fisker Karma is a plug-in hybrid luxury sports sedan equipped with a solar panel, which recharges its Lithium-Ion battery and assists the car's climate control system. According to Fisker Automotive, the Karma could achieve 100 miles to the gallon, has a top speed of 125 mph, and in "sport" mode goes from zero to 60 in 5.9 seconds. Karma owners have been anticipating getting behind the wheel since the pre-sale.
John Mattera of The Mattera Reserve, Inc., one such owner, has been awaiting his model as an automotive enthusiast, investor, and environmentalist. "As one of Fisker Automotive's investors, I stand behind the company and the design they've created. The Karma is sure to change what 'eco-friendly' means for luxury cars," said Mattera.
John Mattera and his wife, Dr. Lan Phan Mattera, have purchased two Karmas, red and white to arrive later in the fall, and will test drive the Karma at Fisker Automotive's exclusive Karma driving event September 1st. Fisker Palm Beach, the newest addition to Palm Beach Motor Cars in downtown West Palm Beach, FL, will host the event as one of North America's largest and most award-winning retailers of Aston Martin, Jaguar, Land Rover, Range Rover, and soon, Fisker.
The Fisker Karma's sleek, stylish lines redefine the image of eco-friendly hybrid cars.
About Fisker Automotive, Inc.
Fisker Automotive is an American car company, founded in 2007, committed to producing electric vehicles with extended range (EVer) that deliver uncompromised responsible luxury(TM). The Fisker Karma Sedan is the world's first premium electric plug-in hybrid representing the company's firm belief that environmentally conscious cars need not sacrifice passion, style, or performance. Fisker Automotive is a global company that is redefining luxury for the modern sports car buyer.
For more information on the brand and the Fisker Karma Sedan, please visit www.fiskerautomotive.com .
About John Mattera
John Mattera is currently the Chairman and CEO of The Mattera Reserve, Inc. a worldwide private equity firm with investments in 23 countries. Together with The Mattera Reserve's partners, the company has backed many of the world's best entrepreneurial leaders. Mr. Mattera is also is committed to providing business-building solutions to growing firms across nearly all industries. For more information please visit: www.thematterareserve.com
The Mattera Reserve logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=8219
About Palm Beach Motor Cars
Palm Beach Motor Cars is one of North America's largest and most award-winning luxury car retailers, home to premier brands such as Aston Martin, Land Rover, Jaguar, Range Rover, and now Fisker. Palm Beach Motorcars has been family owned and operated since 1979, providing full service to the Palm Beaches from their downtown West Palm Beach location.
For more information, please visit Palm Beach Motor Cars or contact the dealership:
Palm Beach Motor Cars
915 S. Dixie Highway
West Palm Beach, FL 33401
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: The Mattera Reserve
CONTACT: Shivani Gupta, Drive Public Relations
info@drivepublicrelations.com
--------------------------
Fisker dominates the Mattera Reserve facebook page:
http://www.facebook.com/pages/The-Mattera-Reserve/130170143704816
Seems like if Fisker and Mattera were that close then Fisker would have some idea about the way that Mattera was simultaneously using the Fisker company to cheat investors out of millions of dollars.
The Praetorian Fund also made a private placement memorandum for G II available to prospective investors (“the G II Memorandum”). This memorandum was similarly false. It referred to G II as “the Company,” “we,” or “us,” and referred to “our common stock (‘Common Stock’) in Fisker Automotive, Inc.” (emphasis added). The G II Memorandum offered $20 million worth of shares of G II at a price of $2.00 per share. The memorandum represented that each share of G II would be convertible into one share of Fisker common stock. The G II Memorandum therefore impliedly represented that G II held 10 million shares of Fisker common stock, which Mattera and Van Siclen knew or recklessly disregarded was false.
Mattera acknowledges he never owned Fisker Series A-1 preferred stock, which the investors were told they were buying. He did have a substantial holding of similar Series B stock, which he said he tasked associates Bradford van Siclen and John Hartley with selling. Mattera said van Siclen, the New Jersey-based private equity broker who is a defendant in the lawsuit along with Hartley, was responsible for misrepresenting the offer.
Mattera used a title company owned by longtime associate Johnny Ray Arnold.
In the Fisker deal, investors deposited a total of $4.5 million in Arnold’s First American Service Transmittal, where it was supposed to stay until they received proof of ownership. The money was pulled from the account. Johnny Arnold passed the money along to himself and to John Mattera, as well as to accounts registered to Mattera's mother and wife, the complaint said. The investors ended up with nothing.
--------------------------
Drive Public Relations
http://www.drivepublicrelations.com
Shivani Gupta of Drive PR, Jon Marquez of Drive PR, and Lisa Yigit from the Mattera Reserve
The Fister Karma
Investors in sleek hybrid sports car say they were conned
http://www.miamiherald.com/2011/10/13/v-print/2452717_investors-in-sleek-hybrid-sports.html#ixzz1eDkHbKdO
BY ADAM H. BEASLEY
abeasley@miamiherald.com
The Fisker Karma — a sleek, plug-in hybrid sports sedan — made its long-awaited debut earlier this year, and to heaping praise.
Car and Driver called the sports car, which fetches upwards to $100,000, “striking, luxurious, and easy on big-car guilt.” Popular Mechanic added: “The Fisker Karma is a standout luxury and performance vehicle, period.”
But for more than a half-dozen deep-pocketed financiers who wanted a stake in the sports car, the industry buzz was little more than salt in the wounds.
That’s because the $4.5 million they shelled out to buy preferred Fisker shares from John A. Mattera, a Boca Raton-based equity firm CEO and self-proclaimed philanthropist, has bought them nothing but frustration and embarrassment, according to a federal lawsuit filed in Fort Lauderdale last month.
Those investors allege Mattera and his partners employed “blatant and fraudulent misrepresentations” to separate them from their millions.
The money, shipped to a Fort Lauderdale title company to be held in escrow until the deal was completed, appears gone, attorneys for the plaintiffs say. The shares? They never existed, the suit claims — and even Mattera admitted to The Miami Herald this week.
But Mattera said allegations that he purposefully misled and defrauded the investors are “absolutely incorrect.”
Mattera acknowledges he never owned Fisker Series A-1 preferred stock, which the investors were told they were buying. He did have a substantial holding of similar Series B stock, which he said he tasked associates Bradford van Siclen and John Hartley with selling. Mattera said van Siclen, the New Jersey-based private equity broker who is a defendant in the lawsuit along with Hartley, was responsible for misrepresenting the offer. A message left for van Siclen at his business, The Praetorian Fund, went unanswered this week.
Miami attorney Loren Cohen, who represents the investors in the lawsuit, said Mattera, 50, was an active participant in the sales pitch, even introducing one of the potential shareholders to Henrik Fisker, the creator of the slick sports car, in the VIP booth of the Los Angeles Auto Show, the suit claims. (Efforts to reach Fisker’s spokesperson and general counsel for comment this week were not successful).
Cohen said his clients, who include a Destin-based businessman and a family trust from New Mexico, didn’t even get Mattera’s Series B shares out of the deal.
“It’s one thing to say, I sold you a Lexus and I’ll end up giving you an Infiniti,” Cohen added. “But the reality is, they ended up getting neither. It’s outrageous.”
For Mattera, it’s not the first time he has been accused of business malfeasance.
Palm Beach County Sheriff’s Office arrested him on fraud, larceny, and grand theft charges in 2001, and he served probation after agreeing to a plea deal.
In 2009, the Securities and Exchange Commission alleged he ran a penny-stock scheme in which he made fraudulent public statements to pump up stock prices at the same time that he was illegally selling unregistered shares of stock. He was ultimately banned from trading penny stocks and agreed to pay nearly $150,000 in fines, court records show.
Mattera’s history of civil litigation doesn’t end there. He has been sued repeatedly in county and federal court, and many of the complaints against him echo the most recent allegations.
In December 2000, a federal judge awarded a dozen Texans a $1.2 million judgment after Mattera and Praetorian failed to appear and defaulted on a lawsuit that claimed Mattera owed them more than $100,000.
The same year, Mattera lost a similar judgment in California, where he allegedly failed to pay a company $104,000 after receiving 400,000 shares of its stock.
And then in August 2011, he reached an undisclosed settlement in a Boca Raton-based suit that alleged another cash-for-shares deal that never materialized.
The common thread among all of these cases: Mattera used a title company owned by longtime associate Johnny Ray Arnold.
In the Fisker deal, the investors deposited the $4.5 million in Arnold’s First American Service Transmittal, where it was supposed to stay until they received proof of ownership. The money was pulled from the account, and it is not clear where it is now, the attorneys say. Arnold, another defendant in the most recent lawsuit, could not be reached for comment.
Mattera’s brushes with the law extend beyond the realm of white-collar crime. Boca Raton cops arrested Mattera on St. Patrick’s Day 2008, after a night out at Mizner Park turned into a violent, boozy bender, police records show. Paramedics called to his home found Mattera unresponsive in a pool of vomit and feces. When he awoke, Mattera attacked a fire-rescue captain, resulting in his being tased by police, the arrest report says. The charges were later dropped.
None of this has derailed Mattera’s quest to become a major player in South Florida’s charitable scene.
Last year, he was recognized as a U.S. Fund for UNICEF volunteer. He has sponsored Florida Atlantic University’s weekly football fan breakfast with legendary coach Howard Schnellenberger.
And he raised $22,000 for the American Red Cross earlier this year, paving the way for him being named a member of the Broward organization’s board.
John Karr, the chapter executive of the American Red Cross of Southern Florida, did not return a phone message left by The Herald this week, but was effusive of his praise of Mattera when the appointment was announced.
“John Mattera is a trailblazer when it comes to helping out the most important local causes in Southern Florida,” Karr said in February. “We couldn’t be happier with the latest addition to our board.”
http://www.miamiherald.com/2011/10/13/v-print/2452717_investors-in-sleek-hybrid-sports.html#ixzz1eDkTVh77
San West Inc (fka Hyperbaric Systems) vs John A Mattera
http://www.sec.gov/Archives/edgar/data/1070181/000109181809000133/hbsy05080910k.htm
ITEM 3.
LEGAL PROCEEDINGS
On December 10, 2001, we filed a complaint entitled HyperBaric v. John A. Mattera, in the United States District Court, Northern Division, Case No. C01-21142. This is an action against John A. Mattera ("Mattera") for breach of contract; breach of the implied covenant of good faith and fair dealing; fraud; securities fraud; and constructive trust in connection with a stock purchase agreement that we entered into with Mattera in April 2001. Pursuant to the agreement, Mattera was to wire transfer the sum of $104,000 within 72 hours of receipt of 5,000 free trading shares of our stock to be deposited with a clearing agent designated by Mattera. Mattera failed to pay and refused to pay for the shares of stock; however, the shares were cleared and released to Mattera by the clearing agent without confirmation that payment had been received by us. Thereafter, the transfer agent refused to cancel the transfer or return the shares without a court order. We are seeking damages; interest allowable by law; rescission of the agreement and return of the shares; attorneys' fees and costs incurred for the suit; punitive damages; and a preliminary injunction preventing the transferring of the shares and/or disposal of the proceeds until termination of the litigation. The complaint was served on Mattera in Florida on December 28, 2001, but to date no response has been filed. A judgment was entered against Mattera in the amount of $117,447.28 on November 15, 2002, and we have attempted to execute on this judgment. There can be no assurance that we will be able to recover any of this amount.
From the SEC Roundtable on Microcap Securities Frauds there was
consensus among all participants for a repository of information on known or suspected offenders so that all gatekeepers ( Brokers, the DTCC, DTC, Finra, OTC Markets, etcetera ) could access and then file Suspicious Activity Reports ( SARs ).
Persons such as Mattera and numerous other repeat offenders would be detected much sooner when all gatekeepers could access an information and SARs repository data-base.
A necessary board for I-HUB readers, ND!!
SEC Halts Scam Touting Access to Pre-IPO Shares of Facebook and Groupon
http://www.sec.gov/news/press/2011/2011-245.htm
SEC Halts Scam Touting Access to Pre-IPO Shares of Facebook and Groupon
Washington, D.C., Nov. 17, 2011 — The Securities and Exchange Commission today filed an emergency enforcement action to stop a fraudulent scheme targeting investors seeking coveted stock in Internet and technology companies like Facebook and Groupon in advance of a public offering.
The SEC alleges that Florida resident John A. Mattera and several other individuals carried out the scam using a newly-minted hedge fund named The Praetorian Global Fund. They falsely claimed that the fund and affiliated Praetorian entities owned shares worth tens of millions of dollars in privately-held companies that were expected to soon hold an initial public offering (IPO) including Facebook, Groupon, and others. Taking advantage of investor interest in pre-IPO shares that are virtually impossible for company outsiders to obtain, Mattera and others solicited funds and gave investors a false sense of comfort that their money was protected by telling them that an escrow service was receiving their funds.
In reality, according to the SEC’s complaint filed in federal court in Manhattan, Mattera and his cohorts never owned the promised pre-IPO shares in these companies. The purported escrow service, headed by John R. Arnold of Florida, merely transferred investor funds to personal accounts controlled by Mattera and Arnold. After Arnold took a cut of the money for himself, Mattera stole most of the remaining funds to afford his lavish personal expenses and pay others for their roles in the scheme.
“By conjuring up a seemingly prestigious hedge fund and touting the safety of an escrow agent, these men exploited investors’ desire to get an inside track on a wave of hyped future IPOs,” said George S. Canellos, Director of the SEC’s New York Regional Office. “Even as investors believed their funds were sitting safely in escrow accounts, Mattera plundered those accounts to bankroll a lifestyle of private jets, luxury cars, and fine art.”
The U.S. Attorney’s Office for the Southern District of New York, which conducted a parallel investigation of the matter, today filed criminal charges against Mattera, who was arrested earlier today.
The SEC is seeking an emergency court order to freeze the assets of Mattera, Arnold, Joseph Almazon of Hicksville, N.Y., David E. Howard II of New York City, Bradford Van Siclen of Montclair, N.J., and eight different entities also charged in the SEC’s complaint.
The SEC alleges that Mattera, who has been a subject of a prior SEC enforcement action and several state criminal actions, used investor proceeds to compensate Van Siclen and others for their involvement in promoting the fraudulent offerings. Howard, who was separately charged by the SEC earlier this year for his role in a boiler room operation, worked for Mattera as an authorized representative of the Praetorian hedge fund. Mattera, Van Siclen, and Howard were each actively involved in providing false documents and information to broker-dealer representatives in pitching their clients to invest in the Praetorian entities. They raised at least $12 million from investors across the country during the past 15 months. Almazon controls Long Island-based unregistered broker-dealer Spartan Capital Partners, which raised a significant portion of the money in the Praetorian entities.
The SEC’s complaint alleges that Spartan Capital solicited investments by phone, word of mouth, and advertisements on professional networking website LinkedIn.com. One advertisement read in part: “[Spartan] can offer the opportunity to buy pre-IPO shares of the following companies: Facebook, Twitter, Zynga, Bloom Energy, Fisker, and Groupon.” Another ad stated: “We have access to Fisker Auto, Groupon, Ren Ren, Bloom Energy and many more! Unlike most of the other investment banking firms, we let you sell your shares right at the open! You also do not need to be in NY to invest in our IPOs!”
According to the SEC’s complaint, the purported escrow accounts at Arnold’s firm — First American Service Transmittals Inc. (FAST) — played a critical role in the fraudulent scheme. Mattera and Van Siclen told investors verbally and in writing that their investments would be held in escrow with FAST. Arnold, who was charged together with Mattera in a previous SEC enforcement action, falsely held out FAST as an escrow agent for the investments. Almost immediately after receiving investors’ deposits, however, Arnold released the money to himself and entities controlled by Mattera, who misappropriated investors’ funds for private jets, luxury cars, fine art, jewelry, and other personal uses. He also transferred money to his mother Ann Mattera and his wife Lan Phan. They are named as relief defendants in the SEC’s complaint for the purpose of reclaiming investor funds unrightfully in their possession.
The SEC’s complaint charges Mattera, Van Siclen, the Praetorian Fund, Praetorian G Power I LLC, Praetorian G Power II LLC, Praetorian G IV, Praetorian G Power V LLC, and Praetorian G Power VI LLC, Arnold, and First American Service Transmittals Inc. with violations, or aiding and abetting violations of, Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5. The complaint further charges Mattera, Van Siclen, the Praetorian G entities, Almazon, Spartan Capital Partners, and Howard with violating Sections 5(a) and 5(c) of the Securities Act by engaging in the unregistered offering of securities, and Almazon and Spartan Capital with violations of Section 15(a) of the Exchange Act by acting as unregistered brokers.
The SEC seeks a temporary restraining order as well as preliminary and permanent injunctive relief and financial penalties against the defendants, as well as disgorgement by defendants and relief defendants of their ill-gotten gains plus prejudgment interest.
The SEC’s investigation, which is continuing, has been conducted by Karen Willenken, Michael Osnato, Richard Needham, and Yvette Quinteros of the New York Regional Office. The SEC’s litigation effort will be led by Preethi Krishnamurthy. The SEC thanks the U.S. Attorney’s Office for the Southern District of New York, Internal Revenue Service, and Swiss Financial Market Supervisory Authority for their assistance in this matter.
For more information about this enforcement action, contact:
Andrew M. Calamari
Associate Regional Director,
SEC’s New York Regional Office
?(212) 336-0042
Michael J. Osnato, Jr.
Assistant Regional Director,
SEC’s New York Regional Office
(212) 336-0156
http://www.sec.gov/litigation/litreleases/2011/lr22160.htm
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22160 / November 18, 2011
SEC v. John A. Mattera, Bradford Van Siclen, The Praetorian Global Fund, et al., (United States District Court for the Southern District of New York, Civil Action No. 11-CV-8323)
SEC Brings Emergency Action to Halt Fraudulent Scheme Offering Shares of Facebook and Other Pre-IPO Companies
The Securities and Exchange Commission announced that on November 17, 2011, it filed an emergency civil enforcement action to halt defendants’ fraudulent sale of securities of investment vehicles that claim to own coveted shares of companies like Facebook and Groupon that are expected to conduct an initial public offering soon. Judge Kevin Castel of the United States District Court for the Southern District of New York has issued a temporary restraining order that, among other things, freezes the assets of multiple defendants and relief defendants.
According to the Commission’s complaint, Florida resident John A. Mattera and several other individuals carried out the fraud using a newly-minted hedge fund named The Praetorian Global Fund. They falsely claimed that the fund and affiliated Praetorian entities owned shares worth tens of millions of dollars in privately-held companies that were expected to soon hold an initial public offering, including Facebook, Groupon, and others. Mattera and others solicited investments by, among other things, telling investors that their funds would be safely held in escrow accounts.
In reality, according to the SEC’s complaint filed in federal court in Manhattan, Mattera and his confederates never owned the promised pre-IPO shares in these companies. The purported escrow service, headed by defendant John R. Arnold of Florida, merely transferred investor funds to personal accounts controlled by Mattera and Arnold. After Arnold took a cut of the money for himself, he released the money to entities controlled by Mattera, who misappropriated investors’ funds for private jets, luxury cars, fine art, jewelry, and other personal uses. Mattera also transferred money to his mother Ann Mattera and his wife Lan Phan. They are named as relief defendants in the SEC’s complaint for the purpose of reclaiming investor funds unrightfully in their possession.
The SEC’s complaint charges Mattera, Bradford Van Siclen, the Praetorian Fund, Praetorian G Power I LLC, Praetorian G Power II LLC, Praetorian G IV, Praetorian G Power V LLC, and Praetorian G Power VI LLC, Arnold, and First American Service Transmittals Inc. with violations, or aiding and abetting violations of, Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5. The complaint further charges Mattera, Van Siclen, the Praetorian G entities, Joseph Almazon, Spartan Capital Partners, and David Howard with violating Sections 5(a) and 5(c) of the Securities Act by engaging in the unregistered offering of securities, and Almazon and Spartan Capital with violations of Section 15(a) of the Exchange Act by acting as unregistered brokers.
The SEC’s investigation, which is continuing, has been conducted by Karen Willenken, Michael Osnato, Richard Needham, and Yvette Quinteros of the New York Regional Office. The SEC’s litigation effort will be led by Preethi Krishnamurthy.
On November 16, 2011, the U.S. Attorney’s Office for the Southern District of New York filed a criminal complaint charging Mattera with securities fraud, wire fraud and money laundering. The SEC thanks the U.S. Attorney’s Office for the Southern District of New York, Internal Revenue Service, and Swiss Financial Market Supervisory Authority for their assistance in this matter.
SEC Complaint in this matter
http://www.sec.gov/litigation/complaints/2011/comp22160.pdf
GEORGE S. CANELLOS
REGIONAL DIRECTOR
Andrew M. Calamari
Michael J. Osnato, Jr.
Preethi Krishnamurthy
Karen Willenken
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
3 World Financial Center, Suite 400
New York, New York 10281-1022
(212) 336-1100
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK _______________________________________________
SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,
v
JOHN A. MATTERA,
BRADFORD VAN SICLEN,
THE PRAETORIAN GLOBAL FUND, LTD.,
PRAETORIAN G POWER I, LLC,
PRAETORIAN G POWER II, LLC,
PRAETORIAN G POWER IV, LLC,
PRAETORIAN G POWER V, LLC,
PRAETORIAN G POWER VI, LLC,
DAVID E. HOWARD II,
JOHN R. ARNOLD,
FIRST AMERICAN SERVICE
TRANSMITTALS, INC.,
JOSEPH ALMAZON,
and SPARTAN CAPITAL PARTNERS,
Defendants,
AND
ANN A. MATTERA
LAN T. PHAN a/k/a LAN PHAN MATTERA,
and EXECUTIVE SOURCE HOLDING, LLC,
_______________________________________________
Plaintiff Securities and Exchange Commission (the “Commission”) for its complaint against Defendants John A. Mattera (“Mattera”), Bradford Van Siclen, The Praetorian Global Fund, Ltd. (the “Praetorian Fund”), Praetorian G Power I, LLC, Praetorian G Power II, LLC, Praetorian G Power IV, LLC, Praetorian G Power V, LLC, Praetorian G Power VI, LLC (individually, “G” I, II, IV, V, or VI, and collectively, the “Praetorian G Entities”), John R. Arnold, First American Service Transmittals, Inc. (“FAST”), Joseph Almazon, Spartan Capital Partners (“Spartan”), and David E. Howard (collectively, the “Defendants”) and Relief Defendants Ann A. Mattera (“Ann Mattera”), Lan T. Phan a/k/a Lan Phan Mattera (“Phan”), and Executive Source Holding, LLC (“Executive Source”) (collectively, the “Relief Defendants”), alleges as follows:
SUMMARY OF ALLEGATIONS
1. The Commission brings this emergency action to stop Defendants’ fraudulent, unregistered sale of securities in investment vehicles that claim to own shares in the highly coveted stock of companies like Facebook that are expected to hold an initial public offering (“IPO”) soon. In fact, the investment vehicles are a scam, and they do not hold the promised shares. Through their scheme, Defendants have obtained more than $12.6 million from investors, much of which Mattera has simply stolen to subsidize his lavish lifestyle of private jets, luxury cars and jewelry.
2. The mechanics of the fraudulent scheme are simple. First, Defendants take advantage of investors’ desire to buy shares in privately-held companies before their IPOs – shares that are difficult, if not virtually impossible, for company outsiders to obtain.
3. Second, acting through a web of registered and unregistered broker-dealers, Defendants solicit investments in special purpose vehicles – the Praetorian G Entities – each of which purports to hold shares of a particular pre-IPO company.
4. Third, investors are directed to wire funds to “escrow” accounts maintained at Branch Bank & Trust (“BB&T”) or Bank of America in the name of Defendant FAST, a purported “escrow service.” The funds are purportedly held in escrow until the IPOs or another triggering event occurs.
5. In reality, Defendants do not own the promised pre-IPO shares and the “escrow” service is a pass-through that transfers virtually all of the investor funds to accounts controlled by Defendants Mattera and Arnold. Mattera simply steals the funds to pay for his lavish personal lifestyle and expenses, to give large sums to his mother and wife, and to give at least Van Siclen and Almazon a cut for their roles in the scheme.
6. Mattera has a long history of criminal conduct. This fraudulent scheme is a more lucrative and sophisticated version of a criminal fraud scheme for which Mattera was convicted eight years ago. In 2003, Mattera pleaded guilty to seven counts of grand theft in three separate Florida criminal cases. In one of those cases, Mattera defrauded investors by selling securities that he falsely claimed to own.
7. As a result of this conduct, Defendants Mattera, Van Siclen, the Praetorian Fund, the Praetorian G Entities, Arnold and FAST have violated anti-fraud provisions of the Securities Act of 1933 (“Securities Act”) and the Securities Exchange Act of 1934 (“Exchange Act”). By selling securities in unregistered offerings, Defendants Mattera, Van Siclen, the Praetorian Fund, the Praetorian G Entities, Almazon, Spartan, and Howard have violated registration provisions of the Securities Act. By acting as a broker without being registered as, or associated with, a registered broker-dealer, Defendants Almazon and Spartan have violated registration provisions of the Exchange Act.
8. In order to halt Defendants’ unlawful conduct, maintain the status quo and preserve any remaining assets for defrauded investors, the Commission seeks emergency relief, including temporary restraining orders and preliminary injunctions, and an order: (i) imposing asset freezes on the Defendants and Relief Defendants and requiring them to repatriate all fraudulent proceeds that are now located abroad, outside the Court’s jurisdiction; (ii) preventing the destruction of documents and ordering expedited discovery; and (iii) requiring the Defendants and Relief Defendants to provide verified accountings. The Commission also seeks permanent injunctions against the Defendants, disgorgement of ill-gotten gains and prejudgment interest thereon from the Defendants and Relief Defendants, and civil monetary penalties from the Defendants.
VIOLATIONS
9. By virtue of the conduct alleged herein, Defendants Mattera, Arnold, FAST, Van Siclen, the Praetorian Fund, G I, G II, G IV, G V, and G VI have violated Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a), and violated and aided and abetted violations of Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5. Defendants Mattera, Almazon, Spartan, Van Siclen, the Praetorian Fund, G I, G II, G IV, G V, G VI, and Howard have violated Sections 5(a) and 5(c) of the Securities Act, 15 U.S.C. §§ 77e(a) and 77e(c). Defendants Almazon and Spartan have violated Section 15(a) of the Exchange Act, 15 U.S.C. § 78o(a).
10. Unless Defendants are temporarily, preliminarily and permanently restrained and enjoined, they each will again engage in the acts, practices, and courses of business set forth in this Complaint, or in acts and transactions of similar type and object.
JURISDICTION AND VENUE
11. The Commission brings this action pursuant to the authority conferred by Section 20 of the Securities Act, 15 U.S.C. § 77t(b), and Section 21(d) of the Exchange Act, 15 U.S.C. § 78u(d).
12. This Court has jurisdiction over this action pursuant to Section 22(a) of the Securities Act, 15 U.S.C. § 77v(a), and Section 27 of the Exchange Act, 15 U.S.C. § 78aa. Defendants, directly or indirectly, singly or in concert, have made use of the means or instrumentalities of transportation or communication in, or the instrumentalities of, interstate commerce, or of the mails, in connection with the transactions, acts, practices, and courses of business alleged herein.
13. Venue lies in this district pursuant to Section 22(a) of the Securities Act, 15 U.S.C. § 77v(a), and Section 27 of the Exchange Act, 15 U.S.C. § 78aa. Certain of the transactions, acts, practices and courses of business constituting the violations alleged herein occurred within the Southern District of New York. Among other things, certain of the Defendants solicited investments in the Praetorian Fund and Praetorian G Entities through one or more meetings in New York, New York. In addition, Defendant Howard lives in New York, New York.
FACTS Defendants
14. Defendant Mattera, age 50, resides in Boca Raton, Florida. Mattera holds himself out as Chairman of the Advisory Board of the Praetorian Fund and routinely conducts business on behalf of the Praetorian Fund and the Praetorian G Entities. In 2009, the Commission charged Mattera, Arnold, and others with fraudulently attempting to avoid registration requirements by backdating promissory notes to obtain improperly unrestricted shares of a company (the “2009 Commission Action”). Mattera consented to a permanent injunction against future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and Sections 5(a) and 5(c) of the Securities Act, a permanent penny stock bar, and an order requiring him to pay disgorgement and penalties of $140,000 plus prejudgment interest. In 2003, Mattera pleaded guilty to seven counts of grand theft in three separate Florida criminal cases. Among other things, Mattera stole $34,000 from two Florida investors by promising to provide them with shares of stock that Mattera falsely represented he owned.
15. Defendant Van Siclen, aged approximately 43, resides in Montclair, New Jersey. Van Siclen is the Managing Director of the Praetorian Fund and routinely conducts business on behalf of the Fund and the Praetorian G Entities.
16. Defendant Praetorian Fund is registered in the British Virgin Islands as a professional mutual fund. The Praetorian Fund is not registered with the Commission in any capacity. Mattera and Van Siclen control the Praetorian Fund.
17. Defendants Praetorian G I, II, IV, V and VI are Delaware limited liability companies. Mattera and Van Siclen control the Praetorian G Entities. The Praetorian G Entities have never registered any of their securities or securities offerings with the Commission.
18. Defendant Arnold, age 61, resides in Florida. Arnold is the principal officer of Defendant FAST and the sole authorized signatory of its bank accounts at BB&T and Bank of America. In the 2009 Commission Action, the Commission obtained a default judgment against Arnold finding him liable for securities fraud, imposing a permanent injunction from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and Sections 5(a) and 5(c) of the Securities Act, ordering Arnold to pay a civil penalty of $65,000 plus prejudgment interest, and imposing a penny stock bar.
19. Defendant FAST is a Florida corporation with its last known place of business in Boca Raton, Florida. FAST claims to be an “escrow service” that “provide[s] security to both parties” in securities transactions. Arnold controls FAST.
20. Defendant Almazon, age 22, resides in Hicksville, New York.
21. Defendant Spartan is an unincorporated entity located in Hicksville, New York. Spartan is not registered with the Commission as a broker-dealer or in any other capacity. Almazon controls Spartan.
22. Defendant Howard, aged approximately 32, resides in New York, New York. He is an authorized representative of the Praetorian Fund and claims to be the manager of Wilshire Capital, a putative investment firm owned by Mattera. On March 22, 2011, in a different action, the Commission charged Howard with fraud in connection with the operation of a boiler room, selling interests in a purported trading platform. On July 27, 2011, the Commodity Futures Trading Commission filed suit against Howard and others for operating a fraudulent and unregistered foreign exchange trading business.
Relief Defendants
23. Ann Mattera, aged approximately 71, resides in Boca Raton, Florida. She is Mattera’s mother.
24. Phan, aged approximately 43, resides in Fort Lauderdale, Florida. She is Mattera’s wife.
25. Executive Source is a Delaware limited liability company with its only place of business in Hicksville, New York. Almazon owns and controls Executive Source.
Background
26. In approximately 1998, Mattera began using the name “Praetorian Corporation” as a vehicle for a prior, unrelated fraud.
27. At some time in approximately 2010, Mattera and Van Siclen formed the Praetorian Fund and the Praetorian G Entities.
28. Each of the Praetorian G Entities purported to be an investment vehicle that held (or in the case of G VI, purportedly would soon acquire from an affiliated party) coveted shares in a single pre-IPO company. G I purported to hold shares in Bloom Energy Corporation, an alternative energy company. G II purported to hold shares in Fisker Automotive, Inc., a company developing a luxury electric car. G IV purported to hold shares in Facebook, Inc., the social media company. G V purported to hold shares in Groupon, Inc., the daily deal website. (Groupon’s shares began publicly trading on November 4, 2011.) G VI purportedly will soon acquire shares of Zynga Inc., a developer of social media games.
The Fraudulent Scheme Begins
29. Mattera and Van Siclen began selling investments in the Praetorian Fund and/or the Praetorian G Entities through one or more broker-dealers at least as early as August 2010.
30. Beginning in approximately November 2010, Mattera, Van Siclen and Howard began discussions with a registered broker-dealer based in New York, New York (“Broker- Dealer A”). Mattera, Van Siclen and Howard sought Broker-Dealer A’s assistance in soliciting investments in two Praetorian G Entities: G II, the purported Fisker investment vehicle, and G IV, the purported Facebook investment vehicle.
31. By approximately December 2010, Broker-Dealer A had agreed to sell interests in G II and G IV.
32. Mattera, Van Siclen, and Howard, on behalf of the Praetorian Fund, G II, and G IV, were each actively involved in providing false documents and information to Broker-Dealer A’s representatives and in pitching Broker-Dealer A’s clients to invest in the Praetorian G Entities.
33. The documents and information provided to Broker-Dealer A for its clients’ use were false in at least two respects. First, Mattera, Van Siclen, and Howard represented that the Praetorian Fund or G II held a large number of shares in Fisker and that the Praetorian Fund or G IV held a large number of shares in Facebook. In fact, as Mattera and Van Siclen knew or recklessly disregarded, the Praetorian Fund and G II held no Fisker shares and the Praetorian Fund and G IV held no Facebook shares. Second, Mattera and Van Siclen, along with Arnold and FAST, represented that investors’ funds, once received, would be held in a FAST escrow account until a later triggering event. In fact, FAST did not hold the funds in escrow, as Mattera, Van Siclen, and Arnold knew or recklessly disregarded. As further alleged in paragraphs 85 through 87, Arnold quickly took a cut of the funds for himself and transferred more than 90% of the funds to Mattera or an entity Mattera controlled.
34. In approximately November 2010 through January 2011, Mattera, Van Siclen, and Howard made oral misrepresentations to one or more representatives of Broker-Dealer A to the effect that the Praetorian Fund or G II held a large number of Fisker shares and that the Praetorian Fund or G IV held a large number of Facebook shares.
35. During the same period, Mattera, Van Siclen, and Howard, on behalf of the Praetorian Fund and G II or G IV, made written misrepresentations to one or more representatives of Broker-Dealer A, as described below.
36. On January 5, 2011, one of Broker-Dealer A’s customers, a prospective investor in G IV, asked a registered representative of Broker-Dealer A questions about the structure of the investment and the Facebook shares. The registered representative forwarded the questions to Van Siclen, who replied that he would return with answers. On January 12, after consulting with Van Siclen, Howard provided a response to the customer’s questions to Broker-Dealer A. Howard falsely represented that the Praetorian Fund had acquired $50 million in Facebook shares. Broker-Dealer A conveyed Howard’s response to the potential investor.
37. Van Siclen drafted the subscription agreement for G II, which contained similar false representations about Fisker shares. The subscription agreement was made available on the Internet at the Praetorian Fund’s website. Clients of Broker-Dealer A who were interested in investing in G II received a copy of and/or link to the subscription agreement.
38. The subscription agreement available to potential investors claimed that G II was “capitalized” with a minimum of 10 million shares of Fisker. Neither the Praetorian Fund nor G II has ever held any shares of Fisker, as Mattera and Van Siclen knew or recklessly disregarded.
39. The Praetorian Fund also made a private placement memorandum for G II available to prospective investors (“the G II Memorandum”). This memorandum was similarly false. It referred to G II as “the Company,” “we,” or “us,” and referred to “our common stock (‘Common Stock’) in Fisker Automotive, Inc.” (emphasis added). The G II Memorandum offered $20 million worth of shares of G II at a price of $2.00 per share. The memorandum represented that each share of G II would be convertible into one share of Fisker common stock. The G II Memorandum therefore impliedly represented that G II held 10 million shares of Fisker common stock, which Mattera and Van Siclen knew or recklessly disregarded was false.
40. Mattera and Van Siclen, on behalf of the Praetorian Fund, G II and G IV, also made oral and written misrepresentations about the escrow account with respect to both G II and G IV, as described below.
41. The G II Memorandum represented that the investments in G II would “be deposited into an escrow fund (the ‘Main Escrow Fund’) First American Transmittals via BB&T bank, Ft. Lauderdale, Florida, USA.”
42. On December 15, 2010, Van Siclen similarly confirmed to Broker Dealer A that its client’s investment in G IV would be placed in escrow. That day, a representative of Broker Dealer A informed Van Siclen that he had “an order for 100K of Facebook.” Van Siclen directed the representative to verify the investor’s ability to consummate the purchase and indicated that the investor’s funds would be thereafter placed in “escrow.”
43. On January 14, 2011, Mattera e-mailed Broker-Dealer A “wire transfer instructions” for its customers’ investments in G II and G IV. Mattera used the email address “jm@thepraetorianfund.com” to send the instructions. Near the top of the page, in bold capital letters, the wire instructions indicated the name of the entity, G II or G IV, respectively. At the very top of the page in smaller capital letters, the wire instructions indicated that the investor funds should be sent to FAST and defined FAST as the “escrow service for the Praetorian Fund.” The G IV wire transfer instructions further instructed that the “payment reference” indicate “ESCROW.” Both sets of wire instructions listed an account number at BB&T bank.
44. On January 20, Mattera asked one of Broker-Dealer A’s registered representatives to let him know when a particular investment in G II would be wired to “Praetorian[’]s escrow” account, once again representing that the investment funds would be held in escrow.
45. As Mattera and Van Siclen knew or recklessly disregarded, their characterizations of FAST as an “escrow service” for the Fund and their references to an “escrow” account were false and misleading. In fact, as further alleged in paragraphs 85 through 87, Arnold almost immediately wired the money received in the escrow account out to himself, Mattera, and entities controlled by Mattera.
Broker-Dealer A’s Due Diligence Raises Red Flags
46. In approximately January 2011, Broker-Dealer A began conducting due diligence on the G II and G IV offerings.
47. On January 19 at 9:14 a.m., Broker-Dealer A’s compliance officer asked Van Siclen for copies of Praetorian’s placement agreement with Facebook and the Facebook stock certificate demonstrating the Praetorian Fund’s ownership of the Facebook shares.
48. As Van Siclen knew, no such documents existed. To conceal this fact, Van Siclen replied to the compliance officer less than twenty minutes later that the Facebook offering had been “oversubscribed” as of the previous week. As Van Siclen knew, the offering was not “oversubscribed.” In at least the five months prior to January 19, G IV, the purported Facebook vehicle, had not sold any of its shares.
49. A few days later, Broker-Dealer A received an email from an individual complaining that G II’s investment documentation was “hobbled [sic] together by a janitor” and seeking proof that G II actually held shares of Fisker.
50. That same month, Broker-Dealer A discovered that Mattera had at least one criminal conviction.
51. By February 4, Broker-Dealer A had terminated its relationship with the Praetorian Fund, G II, G IV, Mattera, Van Siclen and Howard.
Howard Solicits an Investment From Almazon
52. In approximately late 2010 or early 2011, Howard began discussing the Praetorian Fund with Almazon.
53. Howard informed Almazon that Praetorian owned shares of Fisker and was offering those shares to investors through an investment vehicle.
54. Howard informed Almazon that investor money was held in escrow until the IPOs occurred. If an IPO did not occur in the expected time frame, an investor could either request the return of his or her money or move the money to a different Praetorian investment.
55. In approximately January or February 2011, Almazon decided to invest in G II. Howard sent Almazon wire instructions for an account at BB&T that purported to be an escrow account maintained by FAST for the benefit of G II. Almazon signed a subscription agreement for G II and invested approximately $60,000 in a membership interest in the entity by wiring his funds to the BB&T account listed on the wire instructions.
56. Almazon received a wire receipt by email from FAST stating that it had received his funds. Arnold had created the wire receipt and signed it under the pseudonym “JR Garrison.”
57. At some point, Van Siclen informed Almazon that his funds would remain in escrow until Fisker had an IPO, Almazon made a redemption request, or the Praetorian Fund purchased back Almazon’s shares of Fisker.
58. In approximately June 2011, Almazon complained to Van Siclen that he had invested months before but still had not received any documentation confirming his investment.
Almazon and Spartan Solicit Praetorian Investors
59. In early summer 2011, Almazon and his entity, Spartan, began selling interests in the Praetorian G Entities, with Mattera’s and Van Siclen’s knowledge and approval.
60. Howard told Almazon that he could charge investors a higher price than the price offered by the Praetorian G Entities for their shares – in other words, a mark-up – and keep the difference. Howard also told Almazon that Almazon would receive a 10% commission on any money he raised for the Praetorian G Entities.
61. Almazon used Craigslist.com to recruit several college students as interns for Spartan. Almazon used the interns to solicit investments in the Praetorian G Entities. Almazon told the interns that they would receive commissions for successful sales of Praetorian interests.
62. Almazon provided the interns with guidance on how to sell membership interests in the Praetorian G Entities, including by providing anticipated IPO dates and price targets. Almazon also researched how to describe the pre-IPO investment opportunity to potential investors seeking more information.
63. Spartan solicited investments by telephone, word of mouth, and through LinkedIn.com, a popular professional networking website. A Spartan employee posted an advertisement on LinkedIn in July 2011 that read in part: “[Spartan] can offer the opportunity to buy pre-IPO shares of the following companies: Facebook, Twitter, Zynga, Bloom Energy, Fisker, and Groupon.”
64. Another Spartan advertisement on LinkedIn, also available in July 2011, stated: “We have access to Fisker Auto, Groupon, Ren Ren, Bloom Energy and many more! Unlike most of the other investment banking firms, we let you sell your shares right at the open! You also do not need to be in NY to invest in our IPOs!” This advertisement was available to the general public, without any log-in information required.
65. Almazon spoke to and recommended the securities of one or more of the Praetorian G Entities to investors.
66. Almazon received form subscription agreements for investments in each of the Praetorian G Entities from Mattera or Van Siclen. Van Siclen had drafted each of the subscription agreements. Each agreement identified Van Siclen as the contact person.
67. Each subscription agreement explicitly defined the membership interests being offered as “securities” and made clear that the investor was purchasing securities in the Praetorian G Entity holding the pre-IPO shares, not in the pre-IPO company itself. The subscription agreements purported to entitle the investor to shares of the pre-IPO company based on the amount of the investor’s investment in the Praetorian G Entity and at a specified dollar price for the shares of the pre-IPO company. For instance, one version of the G IV subscription agreement entitled G IV investors to convert their investments in G IV into Facebook shares at a price of $39 per share. Similarly, one version of the G V subscription agreement entitled G V investors to convert their investments in G V into Groupon shares at a price of $25 per share.
68. The subscription agreements for each of the Praetorian G Entities (except G VI) also falsely represented that an entity called “the Praetorian Trust” had “capitalized” the Praetorian G Entity with a certain “minimum” number of shares in one of the pre-IPO companies. For example, the G II subscription agreement represented that the Praetorian Trust had capitalized G II with a minimum of ten million Series B-1 preferred shares of Fisker. The Praetorian G IV subscription agreement represented that the Praetorian Trust had capitalized Praetorian G IV with a minimum of one million shares of Facebook. Similarly, the Praetorian G V subscription agreement represented that the Praetorian Trust had capitalized Praetorian G V with a minimum of one million shares of Groupon.
69. At least one version of the G II agreement entitled its investors to Fisker shares held by G II at $5.00 per share. At least one version of the G IV agreement entitled its investors to Facebook shares held by G IV at $39 per share. Similarly, at least one version of the G V agreement entitled its investors to Groupon shares held by G V at $25 per share. Based on these prices, the G II agreement implicitly represented that G II held at least $50 million worth of Fisker shares, the G IV agreement implicitly represented that G IV held at least $39 million worth of Facebook shares, and the G V agreement implicitly represented that G V held at least $25 million worth of Groupon shares.
70. The subscription agreement for each of these Praetorian G Entities was plainly false. None of these Praetorian G Entities has ever held any shares of Fisker, Facebook, or Groupon, as Mattera and Van Siclen knew or recklessly disregarded.
71. These misrepresentations were of the utmost importance to investors, who were investing in the Praetorian G Entities because the entities purported to hold coveted shares of the pre-IPO companies.
72. Almazon, either directly or through Spartan interns or employees at his direction, forwarded the subscription agreements sent by Van Siclen to prospective investors he and Spartan solicited. Investors signed the subscription agreements and returned them to Spartan. Almazon then sent the signed subscription agreements to Van Siclen and/or FAST.
73. Almazon instructed investors to wire funds to a bank account in the name of Relief Defendant Executive Source, which Almazon owned and controlled. Almazon, through Executive Source, kept his mark-up and then wired the remainder to FAST.
74. Almazon and Spartan have successfully solicited investments in each of the Praetorian G Entities, totaling at least $640,000. The vast majority of the investments were for G IV, the purported Facebook vehicle, and G V, the purported Groupon vehicle.
75. As recently as August 2011, Almazon received congratulatory calls from Mattera praising him for his success in obtaining investors. Mattera also asked Almazon whether additional funds would be flowing into the FAST accounts.
76. Almazon received half of the 10% commission on the investment amounts he raised for the Praetorian G Entities. The remaining half was paid to an individual who had introduced Almazon to Howard.
77. Relief Defendant Executive Source obtained and kept a portion of investor funds. Executive Source provided no legitimate services or other consideration in return for this money and has no legitimate claim to the funds.
78. Almazon has not received any Fisker shares or a return on his investment in G II.
Other Investors
79. From at least August 2010 through the present, Mattera and Van Siclen have used one or more other registered or unregistered broker-dealers to solicit additional investments in the Praetorian G Entities.
80. At least as recently as October 25, 2011, Mattera personally solicited investors in one or more of the Praetorian G Entities. On October 25, Mattera arranged for a potential investor in G II to receive wire transfer instructions to a purported FAST escrow account and a subscription agreement. The subscription agreement was substantially the same as the G II subscription agreement described above in paragraphs 66 through 70, with one significant exception. The October 25 G II subscription agreement represented that the Praetorian Trust had capitalized G II with 25 million shares of Fisker – 15 million shares more than had been represented in the prior subscription agreement.
81. From August 2010 to the present, in addition to the funds Mattera and Van Siclen raised through Almazon and Spartan, Mattera and Van Siclen have raised at least an additional $11.5 million in investments for the Praetorian G Entities using the same or similar subscription agreements. More than $1.3 million of this amount was raised from August 1 through September 30, 2011, mostly for investments in G IV and G VI.
Mattera’s Looting of the FAST Accounts
82. The purported FAST escrow accounts play a critical role in the fraudulent scheme. Investors in each of the Praetorian G Entities transferred their funds to one of six different purported FAST escrow accounts, all but one of which contain the word “escrow” in their titles.
83. As set forth above, Mattera and Van Siclen told investors, orally and in writing, that their investments would be held in escrow with FAST. Arnold sent wire receipts on behalf of FAST that falsely represented that an investor’s funds are in “escrow.” FAST’s website states it is an “escrow service” that “provide[s] security to both parties” in securities transactions.
84. These representations were important to investors, who believed in the legitimacy of the Praetorian G Entity investments in part because they believed their funds were held safely in escrow.
85. These representations were false. Once investors transferred their funds to one of the purported FAST escrow accounts, Arnold, the sole signatory on the FAST accounts, removed virtually all of the money almost immediately.
86. Arnold transferred amounts ranging from approximately 2% to 12% of the investors’ money to a FAST corporate administrative account he controls. That money represents Arnold’s cut of investor proceeds for his participation in the fraud.
87. Arnold then transferred the remaining investor funds to two accounts controlled by Mattera in the names of Mattera Asset Management Corporation (“Mattera Management”) and Rhino Island Capital, Inc. (“Rhino Island”).
88. From at least August 2010 through September 30, 2011, almost all of the funds in the Mattera Management and Rhino Island accounts were investor funds initially wired to the FAST escrow accounts for the purpose of investments in the Praetorian G Entities. During that time, Mattera spent more than $5.75 million from the Mattera Management and Rhino Island accounts to pay for lavish personal expenses, such as jewelry and luxury cars; other personal obligations, such as personal tax payments and settlement payments to plaintiffs in a civil lawsuit; and transfers to family members.
89. Of this amount, Mattera transferred more than $2 million of investor funds to his mother, Ann Mattera, and his wife, Phan. Neither Ann Mattera nor Phan provided any legitimate services or other consideration to Mattera in return for this money. Neither Ann Mattera nor Phan has any legitimate claim to the funds.
90. In addition to the funds Mattera used for personal expenses and family transfers, Mattera used an additional $1.75 million of investor funds to purchase approximately 2.6 million Series B-1 shares of Fisker stock in the name of Wilshire Capital, Mattera’s purported investment firm. Mattera made these purchases from November 15 through December 3, 2010. Since then, Mattera has never transferred or sold any of those shares to G II, the Praetorian Fund, “the Praetorian Trust,” or any of the other Praetorian G Entities. In fact, Mattera represented to Fisker’s general counsel in the spring of 2011 that he had no interest in selling the 2.6 million shares of Fisker held by Wilshire Capital.
91. In addition to the investor funds that Mattera spent on the purposes described in the paragraphs above, Mattera has transferred at least $1 million of investor funds to foreign accounts and to an entity that appears to be controlled at least in part by foreign residents.
92. Mattera also used investor funds in the Mattera Management and Rhino Island accounts to pay commissions to Almazon (through the individual who split the 10% commission with Almazon) and to pay Van Siclen for his role in the scheme.
FIRST CLAIM FOR RELIEF
Violations of Section 17(a) of the Securities Act
(Against Mattera, Van Siclen, the Praetorian G Entities, the Praetorian Fund, Arnold and FAST)
93. Paragraphs 1 through 92 are realleged and reincorporated by reference as if fully set forth herein.
94. The investments in the Praetorian G Entities are securities within the meaning of Section 2(1) of the Securities Act, 15 U.S.C. § 77b(1).
95. The misrepresentations and omissions described above are material.
96. From at least August 2010 through August 2011, Defendants Mattera, Van Siclen, the Praetorian G Entities, the Praetorian Fund, Arnold and FAST, directly and indirectly, singly and in concert, knowingly or recklessly, by the use of the means and instruments of transportation or communication in interstate commerce or by the use of the mails, and in connection with the offer or sale of securities, have: (a) employed devices, schemes or artifices to defraud; (b) obtained money or property by means of one or more untrue statements of material fact or one or more omissions of material fact necessary to make the statements, in light of the circumstances under which they were made, not misleading; or (c) engaged in one or more transactions, acts, practices or courses of business which operated or would operate as a fraud or deceit upon purchasers.
97. By reason of the transactions, acts, omissions, practices, and courses of business set forth in this Complaint, Defendants Mattera, Van Siclen, the Praetorian G Entities, the Praetorian Fund, Arnold and FAST have violated, are violating, and unless restrained and enjoined, will continue to violate Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a).
SECOND CLAIM FOR RELIEF
Violations of Section 10(b) of the Exchange Act and Rule 10b-5
(Against Mattera, Van Siclen, the Praetorian G Entities, the Praetorian Fund, Arnold and FAST)
98. Paragraphs 1 through 92 are realleged and reincorporated by reference as if fully set forth herein.
99. The investments in the Praetorian G Entities are securities within the meaning of Section 3(a)(10) of the Exchange Act, 15 U.S.C. § 78c(a)(10).
100. The misrepresentations and omissions described above are material.
101. From at least August 2010 through August 2011, Defendants Mattera, Van Siclen, the Praetorian G Entities, the Praetorian Fund, Arnold and FAST, directly and indirectly, singly and in concert, knowingly or recklessly, by the use of any means or instrumentality of interstate commerce or of the mails, and in connection with the purchase or sale of securities, have: (a) employed devices, schemes or artifices to defraud; (b) made one or more untrue statements of material fact or one or more omissions of material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading; or (c) engaged in one or more acts, practices or courses of business which operated or would operate as a fraud or deceit upon any person.
102. By reason of the acts, omissions, practices, and courses of business set forth in this Complaint, Defendants Mattera, Van Siclen, the Praetorian G Entities, the Praetorian Fund, Arnold and FAST have violated, are violating, and unless restrained and enjoined, will continue to violate Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5.
THIRD CLAIM FOR RELIEF
Aiding and Abetting Violations of Section 10(b) of the Exchange Act and Rule 10b-5 (Against Mattera and Van Siclen)
103. Paragraphs 1 through 92 are realleged and reincorporated by reference as if fully set forth herein.
104. As alleged herein, the Praetorian G Entities and the Praetorian Fund have violated and continue to violate Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
105. Through the conduct alleged herein, Defendants Mattera and Van Siclen knowingly or recklessly provided substantial assistance and aided and abetted and, unless restrained and enjoined, will continue to aid and abet the Praetorian G Entities’ and the Praetorian Fund’s violations of Section 10(b) of the Exchange Act and Rule 10b-5.
FOURTH CLAIM FOR RELIEF
Aiding and Abetting Violations of Section 10(b) of the Exchange Act and Rule 10b-5 (Against Arnold)
106. Paragraphs 1 through 92 are realleged and reincorporated by reference as if fully set forth herein.
107. As alleged herein, Mattera, Van Siclen, the Praetorian Fund, the Praetorian G Entities, and FAST violated and continue to violate Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
108. Through the conduct alleged herein, Arnold knowingly or recklessly provided substantial assistance and aided and abetted and, unless restrained and enjoined, will continue to aid and abet the violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder by Mattera, Van Siclen, the Praetorian Fund, the Praetorian G Entities, and FAST.
FIFTH CLAIM FOR RELIEF
Control Person Liability Under Section 20(a) of the Exchange Act
(Against Mattera and Van Siclen)
109. Paragraphs 1 through 92 are realleged and reincorporated by reference as if fully set forth herein.
110. As alleged herein, the Praetorian G Entities and the Praetorian Fund violated and continue to violate Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
111. From at least August 2010 through the present, Mattera and Van Siclen controlled and still control the Praetorian G Entities and the Praetorian Fund. Mattera and Van Siclen were culpable participants in the Praetorian G Entities’ and the Praetorian Fund’s violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
SIXTH CLAIM FOR RELIEF
Control Person Liability Under Section 20(a) of the Exchange Act
(Against Arnold)
112. Paragraphs 1 through 92 are realleged and reincorporated by reference as if fully set forth herein.
113. As alleged herein, FAST violated and continues to violate Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
114. From at least August 2010 through the present, Arnold controlled and still controls the Praetorian G Entities and the Praetorian Fund. Arnold was and is a culpable participant in FAST’s violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
SEVENTH CLAIM FOR RELIEF
Unregistered Securities Offerings in Violation of Sections 5(a) and 5(c) of the Securities Act (Against Mattera, Van Siclen, the Praetorian Fund, the Praetorian G Entities, Almazon, Spartan, and Howard)
115. Paragraphs 1 through 92 are realleged and reincorporated by reference as if fully set forth herein.
116. No registration statement was filed or in effect for the offering of the Praetorian G Entities’ securities. Nor did the offering and sale of the Praetorian G Entities’ securities qualify for any exemption from the registration requirements set forth in Section 5 of the Securities Act and the rules promulgated thereunder.
117. Mattera, Van Siclen, the Praetorian Fund, the Praetorian G Entities, Almazon, Spartan, and Howard, directly or indirectly, have made use of the means or instruments of transportation or communication in interstate commerce, or of the mails, to offer and sell securities through the use or medium of a prospectus or otherwise, or have carried or caused to be carried through the mails or in interstate commerce, by any means or instruments of transportation, securities for the purpose of sale or for delivery after sale, when no registration statement has been filed or was in effect as to such securities and when no exemption from registration was available.
118. By reason of the foregoing, Mattera, Van Siclen, the Praetorian Fund, the Praetorian G Entities, Almazon, Spartan, and Howard have violated, are violating, and unless restrained and enjoined, will continue to violate Sections 5(a) and 5(c) of the Securities Act, 15 U.S.C. §§ 77e(a) and 77e(c).
EIGHTH CLAIM FOR RELIEF
Acting as an Unregistered Broker-Dealer in Violation of Section 15(a) of the Exchange Act (Against Almazon and Spartan)
119. Paragraphs 1 through 92 are realleged and reincorporated by reference as if fully set forth herein.
120. Defendants Almazon and Spartan have solicited purchases of and effected transactions in securities issued by the Praetorian G Entities and have received commissions based on those transactions. Neither Almazon nor Spartan was registered with the Commission as a broker or dealer, and Almazon was not an associated person of a registered broker or dealer with respect to the conduct alleged in this Complaint.
121. By engaging in the conduct described above, Almazon and Spartan made use of the mails or means or instrumentalities of interstate commerce to effect transactions in or to induce or attempt to induce the purchase or sale of securities (other than an exempted security or commercial paper, bankers’ acceptances, or commercial bills) without registering as a broker or dealer in accordance with Section 15(b) of the Exchange Act, 15 U.S.C. § 78o(b).
122. By reason of the foregoing, Almazon and Spartan have violated and unless restrained and enjoined will continue to violate Section 15(a) of the Exchange Act, 15 U.S.C. § 78o(a).
NINTH CLAIM FOR RELIEF
(Against Relief Defendants)
123. Paragraphs 1 through 92 are realleged and reincorporated by reference as if fully set forth herein.
124. Relief Defendants Ann Mattera, Phan and Executive Source have each obtained proceeds of the fraudulent, unregistered offerings of securities alleged above under 25 circumstances in which it is not just, equitable, or conscionable for the Relief Defendants to retain these ill-gotten gains. Relief Defendants gave no consideration for their receipt of these ill-gotten gains and have no legitimate claim to these funds. Relief Defendants have therefore each been unjustly enriched.
125. By reason of the foregoing, Relief Defendants Ann Mattera, Phan and Executive Source should disgorge their ill-gotten gains, plus prejudgment interest thereon.
relief:
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that the Court grant the following
I. Enter a Final Judgment finding that the Defendants each violated the securities laws and rules promulgated thereunder as alleged against them herein;
II. Enter an Order temporarily and preliminarily, and a Final Judgment permanently, restraining and enjoining the Defendants and their agents, servants, employees and attorneys and all persons in active concert or participation with them who receive actual notice of the injunction by personal service or otherwise, and each of them, from committing future violations of each of the securities laws and rules promulgated thereunder, or alternatively, from aiding and abetting such future violations, as respectively alleged against them herein.
III. Enter an Order freezing the assets of the Defendants, and all assets under their control, and freezing the assets of the Relief Defendants up to the amount of their ill-gotten gains.
IV. Enter an Order directing the Defendants and Relief Defendants to file with this Court and serve upon the Commission, within three (3) business days, or within such extension of time as the Commission staff agrees in writing or as otherwise ordered by the Court, a verified written accounting, signed by each of them under penalty of perjury.
V. Enter an Order requiring Defendants to repatriate all funds and assets obtained from the fraudulent activities described herein that are now located outside the Court’s jurisdiction.
VI. Enter an Order permanently restraining and enjoining the Defendants from destroying, altering, concealing, or otherwise interfering with the access of the Commission to relevant documents, books and records.
VII. Enter a Final Judgment directing the Defendants and Relief Defendants to disgorge their ill-gotten gains, plus prejudgment interest.
VIII. Enter a Final Judgment directing the Defendants to pay civil money penalties pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)].
IX. Granting such other and further relief as this Court deems just and proper.
Dated:
New York, New York November 17, 2011
Of Counsel:
Andrew M. Calamari
Michael J. Osnato, Jr.
Preethi Krishnamurthy
Karen Willenken
___________________________________
George S. Canellos
Regional Director
New York Regional Office
SECURITIES AND EXCHANGE COMMISSION
3 World Financial Center
New York, New York 10281-1022
Telephone: (212) 336-0116 (Krishnamurthy)
Fax: (212) 336-1319 (Krishnamurthy)
FBI News Release:
http://www.stopfraud.gov/news/news-11172011-2.html
U.S. Department of Justice
United States Attorney
Southern District of New York
www.justice.gov/usao/nys
November 17, 2011
Florida Businessman Arrested in Connection with $11 Million Securities Fraud Scheme
NEW YORK – John A. Mattera was arrested this morning on charges of securities fraud, wire fraud and money laundering in connection with an $11 million scheme to defraud investors through false claims of ownership of shares of Facebook Inc., Groupon Inc. and other private companies. Mattera is also alleged to have misappropriated millions of dollars of investor funds for his own personal use.
The arrest was announced today by Preet Bharara, U.S. Attorney for the Southern District of New York, and Victor W. Lessoff, the Special Agent-in-Charge of the Newark Field Office of the Internal Revenue Service – Criminal Investigation (IRS-CI).
U.S. Attorney Bharara stated: “As alleged, John Mattera duped investors into believing they had bought rights to shares of coveted stock in Facebook and other highly visible and attractive companies which had not yet gone public. As the complaint describes, Mattera told elaborate lies about stock he did not own and about how he would keep investors’ money safe in escrow accounts. Instead, Mattera took the investors’ money to fund his own extravagant lifestyle. With today’s charges, his charade is exposed and he will be held to account for his alleged crimes.”
IRS-CI Special Agent-in-Charge Lessoff stated: “The allegations against Mr. Mattera show that the appearance of success can be a tangled web of financial lies. The Internal Revenue Service, Criminal Investigation is committed to leveraging the financial investigative skills of its agents to identify and investigate fraudulent schemes that oftentimes victimize innocent investors.”
According to a complaint unsealed today in Manhattan federal court:
In 2010 and 2011, Mattera controlled and held himself out as chairman of the Advisory Board of Praetorian Global Fund Ltd., a professional mutual fund. In that capacity, Mattera exercised the day-to-day management decisions for the company.
Beginning in the late summer of 2010, Mattera and others promoted to investors the opportunity to invest in special purpose entities related to Praetorian (the G Power Entities). Mattera falsely represented that the G Power Entities owned shares in the stocks of private companies such as Facebook and Groupon, among others. Ownership of stock in these private companies was particularly attractive because, as Mattera and others represented, there was an expectation that an initial public offering would soon occur, thereby increasing the value of the shares. However, as Mattera well knew, neither he, Praetorian nor the G Power Entities held these shares of stock.
Based on the misrepresentations of Mattera and others, investors sent more than $11 million into escrow accounts maintained at a Florida bank. Mattera reassured investors that their money would be held in the escrow accounts until either the offering was completed or another triggering event took place, at which time the investors would receive their ownership interest in the particular special purpose entity. However, instead of maintaining the investor money in the escrow accounts as he promised, Mattera caused the vast majority of it to be transferred to other entities with which he was associated. Ultimately, Mattera misappropriated more than $11 million of investor money and spent nearly $4 million on personal items for his family and himself, such as expensive jewelry, interior decorating and luxury cars.
Mattera, 50, was arrested at his residence in Fort Lauderdale, Fla. He is charged with one count of securities fraud; one count of wire fraud; one count of conspiracy to commit securities fraud and wire fraud; and one count of money laundering. He faces a maximum sentence of 20 years in prison on each of the securities fraud, wire fraud and money laundering charges; and a maximum sentence of five years in prison on the conspiracy charge. The defendant also faces a fine of the greater of $5 million or twice the gross gain or gross loss from the offense on the securities fraud charge, as well as fines of lesser amounts on the remaining charges.
Mattera was presented earlier today before U.S. Magistrate Judge Robin S. Rosenbaum in U.S. District Court for the Southern District of Florida.
U.S. Attorney Bharara praised the work of the IRS, which jointly investigated this case with the criminal investigators of the U.S. Attorney’s Office. He also thanked the U.S. Securities and Exchange Commission, and said the investigation is continuing.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which U.S. Attorney Bharara serves as a co-chair of the Securities and Commodities Fraud Working Group. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
Assistant U.S. Attorney Eugene Ingoglia is in charge of the prosecution.
The charges contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Primetime Group, Inc (Hunt Gold Corp) litigation
http://www.sec.gov/litigation/litreleases/2009/lr21105.htm
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21105 / June 25, 2009
Securities and Exchange Commission v. Prime Time Group, Inc.
Case No. 09-80952-CIV-COHN (S.D. Fla.)
The Securities and Exchange Commission today charged Prime Time Group, Inc. (now known as Hunt Gold Corporation), its former chief executive officers, Johnny Ray Arnold and Dallas L. Robinson, and its former chief operating officer, Troy K. Metz, with securities fraud for their participation in the dissemination of materially false and misleading press releases. The Commission also charged Prime Time, Arnold, and one of Prime Time’s largest shareholders, John A. Mattera, with securities antifraud and registration violations for their participation in a fraudulent scheme to evade the registration requirements.
The Commission’s complaint, filed in the United States District Court for the Southern District of Florida, alleges that from February 2006 through November 2007, defendants Prime Time, Arnold, Robinson, and Metz participated in the dissemination of false and misleading press releases to the public concerning, among other things, Prime Time’s acquisition and ownership interest in a Puerto Rico convenience store franchise, agreements the Company claimed to have with other wireless businesses, and its purported acquisitions of other companies.
The complaint also alleges that during the same period, Prime Time, Arnold, and Mattera made false statements to the Company’s transfer agent in connection with a fraudulent scheme involving the issuance of bogus promissory notes. This scheme allowed Mattera to obtain millions of unlegended shares of Prime Time stock, most of which he later sold in the open market in November 2007.
The complaint further alleges that Prime Time, Arnold, and Mattera violated the securities registration provisions by engaging in unregistered distributions of Prime Time stock. For instance, the Commission alleges that Prime Time, Arnold, and Mattera engaged in an improper “gypsy swap” transaction in which Mattera agreed to transfer his unlegended shares to various stock promoters on behalf of Prime Time. In return, Mattera received restricted stock from the Company. This scheme was designed to circumvent the securities registration requirements because Prime Time could not legally issue unrestricted shares to the stock promoters without filing a registration statement.
The Commission’s complaint charges: Prime Time, Arnold, and Mattera with violating Sections 5(a) and 5(c) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; and Robinson and Metz with violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. In its complaint, the Commission seeks permanent injunctions and civil penalties against all the defendants, disgorgement plus prejudgment interest against Mattera, and penny stock bars against Arnold, Robinson, Metz, and Mattera.
On June 15, 2009, the Commission temporarily suspended trading in the securities of Hunt Gold Corporation (Prime Time’s new name) because of questions raised about the accuracy and adequacy of publicly disseminated information concerning, among other things, Hunt Gold’s gold mining exploration business. The Commission staff acknowledges the assistance of the British Columbia Securities Commission in its investigation.
For further information, see Exchange Act Release No. 60109 (June 15, 2009).
SEC Complaint in this matter
http://www.sec.gov/litigation/complaints/2009/comp21105.pdf
SECURITIES AND EXCHANGE COMMISSION,
v.
PRIME TIME GROUP, INC., nka HUNT GOLD CORPORATION, JOHNNY RAY ARNOLD, DALLAS L. ROBINSON, TROY K. METZ, AND JOHN A. MATTERA
June 25, 2009
COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF Plaintiff Securities and Exchange Commission alleges as follows:
INTRODUCTION
1. This action arises from the Defendants' fraudulent conduct involving the stock of Prime Time Group, Inc., nka Hunt Gold Corporation ("Prime Time"), a company that purported to maintain interests in wireless products and services, retail oil and gas, convenience stores, and automotive equipment.
2. From approximately February 2006 through November 2007, Prime Time, its former Chief Executive Officers, Johnny Ray Arnold and Dallas Robinson, and its former Chief Operating Officer.and President, Troy K. Metz, participated in the dissemination of materially false and misleading press releases to the public conGeming, among other things, Prime Time's acquisition and ownership interest in a convenience store franchise in Puerto Rico, agreements the Company claimed to have with other wireless businesses, and purported acquisitions.
3. During this time period, Prime Time, Arnold and one of Prime Time's largest shareholders, John A. Mattera, also engaged in a fraudulent scheme involving the issuance of bogus promissory notes. This scheme resulted in Mattera's obtaining millions of unlegended shares of Prime Time stock that he later sold on the .open market in November 2007.
4. From approximately April 2006 to September 2007, Prime Time, through Arnold, also directed the Company's transfer agent to lift the restricted legend on millions of shares of Prime Time stock distributed to Mattera in transactions in which there was no effective registration statement. They also engaged in an improper transaction in which Mattera agreed to transfer his unlegended shares to various stock promoters on behalf of Prime Time. In return, Mattera received restricted stock from the Company.
5. Through this conduct Prime Time, Arnold, Robinson, Metz, and Mattera violated Section lOeb) of the Securities Exchange Act of 1934 (the "Exchange Act") [15 U.S.C. § 78j(b], and Exchange Act Rule 10b-5 [17 C.F.R. § 240.lOb-5], and Prime Time, Arnold and Mattera violated Sections 5(a) and 5(c) of the Securities Act of 1933 (the "Securities Act") [15 U.S.C. §§ 77e(a) and 77e(c)]. Unless enjoined, they are reasonably likely to continue to violate the federal securities laws.
6. The Commission seeks various forms of equitable relief, including permanent injunctions against future violations of the federal securities laws and civil penalties as to all Defendants, disgorgement plus prejudgment interest against Mattera, and penny stock bars against Arnold, Robinson, Metz, and Mattera.
DEFENDANTS
7. Prime Time is a Florida-based corporation that purported to maintain interests in wireless products and services, retail oil and gas, convenience stores, and automotive equipment. Prime Time's common stock was not registered with the Commission and was quoted on the Pink Sheets under the symbol "PRTH." In November 2007, Prime Time changed its name to Hunt Gold Corporation, and now purportedly focuses its business on gold exploration.
8. Arnold is a resident of Fort Lauderdale, Florida. Arnold was the Chief Executive Officer and Chairman of Prime Time from approximately July 2004 to November 2006, and served as Chairman again from approximately January 2007 to December 2007. From at least February 2006 to November 2007, Arnold participated in drafting and reviewing Prime Time's press releases. During this time period, Arnold also participated in a fraudulent scheme to backdate promissory notes and participated in the unregistered distribution of Prime Time stock to Mattera.
9. Robinson is a Canadian citizen who resides in British Columbia. Robinson was the Chief Executive Officer of Prime Time from approximately November 2006 to April 2007 and serVed as Chairman from approximately November 2006 to January 2007. Robinson participated in drafting and reviewing Prime Time's press releases concerning the company's wireless division.
10. Metz is a Canadian citizen who resides in Regina, Saskatchewan. Metz was the President and Chief Operating Officer of Prime Time from approximately November 2006 to April 2007. Metz participated in drafting and reviewing Prime Time's press releases concerning the company's wireless division.
11. Mattera is a resident of Boca Raton, Florida. Mattera was the President of The Mattera Reserve, Inc. and owned several other companies that acquired Prime Time stock during the relevant time period. He was one of Prime Time's largest shareholders; Along with Arnold, Mattera participated in a fraudulent scheme to backdate promissory notes, resulting in his obtaining millions of improperly unrestricted shares of Prime Time stock that he later sold on the openmarket. Mattera also participated in the unregistered distribution of Prime Time stock.
JURISDICTION AND VENUE
12. The Court has jurisdiction over this action pursuant to Sections 20(b), 20(d), and 22(a) of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d), and 77v(a)], and Sections 21(d), 21(e), and 27 ofthe Exchange Act [15 U.S.C. §§ 78u(d), 78(u)(e), and 78aa].
13. This Court has personal jurisdiction over the Defendants, and venue is proper in the Southern District o f Florida because, among other things:
a. Prime Time is a Florida corporation that was located in Boca Raton during the events alleged in this Complaint, and the acts and transactions constituting violations of the Securities Act and Exchange Act occurred in the Southern District;
b. Arnold resides in the Southern District, participated in the dissemination of Prime Time's false and misleading press releases, and participated in the backdating of promissory notes as part of a scheme to distribute improperly unrestricted shares of Prime Time stock to Mattera;
c. Robinson was Chief Executive Officer and Chairman of Prime Time, and used e mail and other means of electronic communication to correspond with individuals located in the Southern District in connection with his participation in the dissemination of Prime Time's false and misleading press releases;
d. Metz was Chief Operating Officer and President of Prime Time, and used e-mail and other means of electronic communication to correspond with individuals located in the Southern District in connection with his participation in the dissemination of Prime Time's false and misleading press releases; and
e. Mattera resides in the Southern District and participated in the backdating of promissory notes as part of a scheme to distribute improperly unrestricted shares of Prime Time stock that he later sold on the open market. He also participated in other unregistered distributions of Prime Time stock.
14. In connection with the conduct alleged in this Complaint, the Defendants made use of the meflIlS or instruments of interstate commerce, the means or instruments of transportation and communication in interstate commerce, and the mails.
FACTUAL ALLEGATIONS
A. False Statements About Prime Time's Purported Convenience Store Acquisition
15. In the summer of 2005, Prime Time began negotiations to acquire Puerto Rico-7 ("PR-7"), a company that owned and operated fourteen 7-Eleven convenience stores in Puerto Rico.
16. Around August 2005, Prime Time reached an agreement with 7-Eleven, Inc. (the major shareholder of PR-7) to purchase the assets of PR-7 and become the exclusive area licensee for the PR-7 stores. However, Prime Time needed to obtain financing to close the deal, which it was subsequently unable to arrange.
17. As a result, in January 2006, Prime Time executed promissory notes with 7 Eleven and four other PR-7 shareholders. Prime Time agreed to pay the purchase price in installments for the remainder ofthe year.
18. To help make the installment payments and pay for PR-Ts expenses, Prime Time obtained a short-term loan from Mattera in April 2006, using as collateral 92% of PR-Ts assets and shares o f Prime Time stock that Arnold owned.
19. However, a month later, Prime Time defaulted on the loan and Mattera acquired the 92% of PR-Ts assets Prime Time had used as collateral. In September 2006, Mattera signed an agreement with 7-Eleven to acquire control over the area license for the PR-7 stores.
20. From approximately February 2006 through November 2007, Prime Time, Arnold, Robinson, and Metz participated in the dissemination of materially false and misleading press releases to the public about the aborted PR-7 acquisition. Even though Prime Time's shares did not trade on an efficient market, many of these false and misleading press releases had the effect of increasing the volume in Prime Time's shares.
21. For example, on February 22, 2006, Prime Time, through Arnold, issued,a press release announcing it had "acquired all of the outstanding shares" of PR-7. Prime Time, however, failed to disclose that the only way in which it was able to acquire PR-7 was to enter into promissory notes with PR-Ts shareholders, requiring monthly payments for the remainder of the year. This release also failed to disclose that if the Company defaulted on the notes, it could be forced to sell its interest in PR-7.
22. Prime Time, through Arnold, also issued two misleading press releases that reported positive financial figures for PR-7, while omitting loss and deficit figures that would have given a true picture of PR-Ts financial position.
23. Specifically, on February 28, 2006, Prime Time announced that PR-Ts sales topped $18 million in 2005. The Company, however, failed to put the revenue figure in context by disclosing that PR-7 actually suffered a net loss of about $557,000 and had an accumulated deficit of more than $1.4 million during that same year. Prime Time issued a similar press release on March 23,2006, stating PR-7 had generated gross revenues of$18 million in 2005.
24. At the time he and Prime Time issued these press releases, Arnold had reviewed PR-T s financial statements, and therefore knew about PR-T s losses.
25. Furthermore, on September 22,2006, Prime Time, through Arnold, issued a press release stating it operated fourteen 7-Eleven stores in Puerto Rico. In fact, Prime Time no longer held the area license to operate the PR-7 stores, because it had transferred the license to Mattera on or about September 8, 2006.
26. In addition, between December 2006 and November 2007, Prime Time, through Arnold, Robinson, and Metz, issued numerous press releases discussing PR-Ts business activities, many of which stated that Prime Time "maintains its interest in PR7 Inc." These press releases omitted the fact that Prime Time had lost 92% of its ownership interest in PR-7 in May 2006. They also omitted stating the Company had lost the area license to operate PR-7.
B. False Statements About Prime Time's Wireless Division
27. After losing the majority of its interest in PR-7, Prime Time sought out a new business. In October 2006, the Company acquired Robinson Wireless, Inc., a Canadian-based company that purportedly specialized in selling mobile products and accessories, for a combination of stock and. cash. Prime Time formed a "wireless division" through the acquisition.
28. As part of the acquisition, Arnold agreed to step down as Prime Time's Chief Executive Officer and Chairman and Robinson took over those positions. Metz assumed the positions of President and Chief Operating Officer of Prime Time.
29. Following the merger, Arnold maintained a role at Prime Time as a consultant. In January 2007, however, Arnold was reinstated as Chairman, though Robinson remained as Chief Executive Officer through at least April 2007.
30. Prime Time issued false and misleading press releases concerning the Robinson Wireless acquisition and its subsequent operations. On September 22, 2006, Prime Time, through Arnold, issued a press release touting its plans to acquire Robinson Wireless. In this press release, Prime Time claimed Robinson Wireless had "exclusive marketing agreements in place with Virgin Mobile, ... FIDO and T-Mobile."
31. In fact, no marketing agreements with FIDO or T-Mobile existed. In addition, the only agreement Robinson Wireless had with Virgin Mobile was an "agreement in principle," which merely contemplated negotiations between the two companies to reach an agreement in the future. The two companies never reached a definite agreement.
32. Furthermore, between November 2006 and January 2007, Prime Time, through Robinson and Metz, issued a series of misleading press releases touting the revenue and sales figures for its wireless division, while failing to disclose that the division was experiencing significant losses.
33. For example, a December 19, 2006 press release announced the wireless division generated sales growth averaging 15% per week in November 2006. However, the wireless division's internal financial records show that, although sales increased during November, expenses doubled and the division had a net monthly loss of nearly $56,000.
34. In addition, in a January 23, 2007 press release, Prime Time boasted that the wireless division had generated more than $900,000 in revenue in its first six months of operations. This press release, however, omitted to disclose that the, division had a net loss of nearly $500,000 in the same period.
35. At the time Prime Time issued these press releases, Robinson had reviewed the fmancial statements ofthe wireless division, and therefore knew its true financial condition.
c. False Statements About Other Acquisitions
36. During this same time period, Prime Time issued several other false and misleading statements about purported acquisitions.
37. On December 18, 2006, Prime Time, through Robinson and Metz, issued a press release announcing it had completed a licensing agreement with a manufacturer of cell phone accessories purportedly allowing Prime Time to distribute the accessories throughout North America. The press release was misleading because, although the parties had negotiated the terms of a licensing agreement, Prime Time had not executed it and a deal was never completed.
38. Next, on January 16, 2007, Prime Time, through Robinson and Metz, issued a press release announcing it had acquired Xpress Your Cell USA LLC.
39. In truth, at the time of this press release, Prime Time had not entered into a fmal agreement to purchase the company. Rather, the agreement the two companies had signed merely provided for further negotiations. The acquisition was never completed.
40. Finally, on May 2, 2007, Prime Time issued a press release that Arnold drafted announcing it had completed the acquisition of Southern Wheel Workz, Inc., an automotive rent to-own franchise. The press release said Prime Time now had a "controlling interest" in this company. Arnold claimed in this press release that the acquisition "could easily be a $100 million venture within a relatively short period of time."
41. These statements were false because Prime Time's acquisition of Southern Wheel was not finalized, but rather was contingent on Prime Time opening a Southern Wheel store. Prime Time did not have enough money to open a store, nor did it even have a location in mind for one. In fact, Prime Time was never able to open a store for Southern Wheel.
D. The Scheme To Issue Unrestricted Shares To Mattera
42. During the same period Prime Time issued the false and misleading press releases, Arnold and Mattera also engaged in a scheme that allowed Mattera to obtain millions of unlegended shares of Prime Time stock through several bogus promissory notes.
43. This fraudulent scheme began when Arnold and Mattera executed three nearly identical promissory notes, dated May 2005, August 2005, and September 2005. The promissory notes supposedly memorialized loans of $110,000, $200,000 and $250,000, respectively, that Mattera or his company, Mattera Reserve, made to Prime Time. Prime Time's collateral for the loans was more than 44 million shares of restricted stock in the company. The notes each provided that full repayment was due within 60 days of their execution.
44. The three promissory notes were fraudulently back dated. Indeed, the notes were not executed in 2005, because Arnold and Mattera did not meet each other until sometime in 2006. In addition, Mattera Reserve, which is listed as the lender in the May 2005 and September 2005 notes, was not formed until 2006. Moreover, Mattera never actually loaned this money to Prime Time.
45. In November 2006, January 2007, and April 2007, Mattera ostensibly called the three notes in default.
46. After receiving the default notices, Arnold authorized Prime Time's transfer agent to issue more than 44 million restricted shares to Mattera. Mattera ultimately received these shares in February 2007 and August 2007.
47. Following issuance of the restricted shares, Arnold and Mattera sought to have the restrictive legends on them lifted. In October 2007, Arnold fraudulently submitted three legal opinion letters from an attorney to Prime Time's transfer agent stating the agent should lift the restricted legends on the shares pursuant to the safe harbor from registration provided by Rule 144 of the Securities Act.
48. Each opinion letter described the shares as a pledge from an affiliate of Prime Time in connection with a promissory note. The opinion letters, relying on the fraudulent
original issue dates of the promissory notes, claimed the notes satisfied the minimum two-year holding period under Rule 144.
49. However, because the promissory notes were fraudulent and not issued in 2005, the safe harbor provided by Rule 144 was unavailable.
50. Arnold also provided the transfer agent with copies of the fraudulent promissory notes, and with three Rule 144(k) representation certificates (certificates in which the signer states the stock meets the conditions under Rule 144 to be unrestricted) that Mattera had signed. In the certificates, Mattera falsely stated to the transfer agent that the promissory notes had been executed in 2005 and were in default.
51. Based on the fraudulent information Arnold and Mattera provided, the transfer agent lifted the restricted legends on the shares and Mattera received more than 44 million unlegended Prime Time shares to sell on the open market.
52. Throughout the month of November 2007, Mattera sold more than 41 million of these shares.
E. Other Unregistered Distributions Of Shares To Mattera
53. On at least two other occasions, Prime Time and Arnold improperly issued millions of unlegended Prime Time shares to Mattera.
54. In the first instance, on April 6, 2006, Prime Time's board approved issuing more than 32 million restricted shares to Mattera, supposedly because the Company had defaulted on another loan from him.
55. In February 2007, less than a year later, Arnold sent a letter to Prime Time's transfer agent, along With a resolution from its board, instructing the transfer agent to remove the
restricted legend on the shares. Arnold did not provide the transfer agent with a legal opinion letter. Based on Arnold's request, the transfer agent lifted the restricted legend on the shares.
56. Because Mattera held these shares for less than one year, they did not qualify for the safe harbor provisions of Rule 144, and the transfer agent should not have lifted the restricted legend.
57. In the second instance, in September 2006, Arnold transferred more than 36 million shares of his personal Prime Time stock to Mattera after Prime Time defaulted on the PR-7 loan agreement. Arnold had pledged his stock as security for that loan.
58. Arnold had acquired at least 32 million of the more than 36 million shares in October 2005, less than two years earlier.
59. About a month after transferring the restricted shares to Mattera, Arnold provided the transfer agent with another board resolution and instructions to lift the restricted legends on them.
60. In November 2006, the transfer agent lifted the legends. Arnold did not submit a legal opinion letter to the transfer agent for this transaction.
61. Because Arnold and Mattera had held these shares for less than two years, the agent should not have lifted the restricted legend.
62. No registration statement was in effect at the time any of these shares were distributed to Mattera.
F. Prime Time Conducted An Improper "Gypsy Swap" Transaction
63. Between November 2006 and September 2007, Prime Time, through Arnold, impermissibly tried to evade registering a distribution of millions of Prime Time shares to pay for a promotional campaign for Prime Time's stock by conducting a type of transaction known as a "gypsy swap." This is a transaction in which the participants illicitly funnel unrestricted shares to third parties in exchange for restricted stock.
64. In this instance, Prime Time and Arnold arranged for Mattera to transfer some of the improperly issued, unrestricted shares discussed above to various stock promoters on behalf of the company. In return, Prime Time agreed to issue restricted stock back to Mattera.
65. Mattera transferred at least 24 million shares to Prime Time's stock promoters during this period in connection with Prime Time's promotional campaign.
66. This scheme was designed to circumvent the securities registration requirements because Prime Time could not legally issue unrestricted shares to the stock promoters without filing a registration statement.
COUNT I
Fraud in Violation of Exchange Act Section lO(b) and Exchange Act Rule lOb-5 (Against All Defendants)
67. The Commission repeats and realleges Paragraphs 1 through 66 of this Complaint.
68. From at least February 2006 to November 2007, the Defendants, directly or indirectly, by use of the means or instruments of interstate commerce or of the mails, or of the facility of a national securities exchange, in connection with the purchase or sale of securities, as described in this Complaint, knowingly, willfully or recklessly: (a) employed devices, schemes or artifices to defraud; (b) made untrue statements of material fact or omitted to state material facts necessary to make the statements made, in light of the circumstances under which they
were made, not misleading; or (c) engaged in acts, practices, or courses of·business which operated or would operate as a fraud or deceit upon the purchasers ofsuch securities.
69. By reason of the foregoing, the Defendants violated and, unless enjoined, are reasonably likely to continue to violate, Section lOeb) of the Exchange Act [15 U.S.C. § 78j(b)] and Exchange Act Rule lOb-5 [17 C.F.R. § 240.lOb-5].
COUNT II
Unregistered Distribution of Securities iii Violation of Securities Act Sections 5(a) and 5(c) (Against Prime Time, Arnold, and Mattera)
70. The Commission repeats and realleges Paragraphs 1 through 66 of this Complaint.
71. No registration statement was filed or in effect with the Commission pursuant to the Securities Act and no exemption from registration exists with respect to the securities and transactions described in this Complaint.
72. From at least April 2006 to November 2007, Defendants Prime Time, Arnold, and Mattera, directly and indirectly: (a) made use of the means or instruments of transportation or communication in interstate commerce or of the mails to sell securities as described herein, through the use or medium of a prospectus or otherwise; (b) carried securities or causing such securities, as described in this Complaint, to be carried through the mails or in interstate commerce, by any means or instruments of transportation or communication in interstate commerce or of the mails to offer to sell or offer to buy through the use or medium of any
prospectus or otherwise, as described in this Complaint, without a registration statement having been filed or being in effect with the Commission as to such securities.
73. By reason of the foregoing, Defendants Prime Time, Arnold, and Mattera violated, and, unless enjoined, are reasonably likely to continue to violate, Sections 5(a) and 5(c) ofthe Securities Act, [15 U.S.C. §§ 77e(a) and 77e(c)]
RELIEF REQUESTED
WHEREFORE, the Commission respectfully requests that the Court:
I. Declaratory Relief
Declare, determine and find that the Defendants committed the violations of the federal securities laws alleged herein.
II. Permanent Injunction
Issue a Permanent Injunction, restraining and enjoining Prime Time, Arnold, Robinson, Metz, and Mattera from violating Section 10(b) ofthe Exchange Act, and Rule 10b-5 thereunder, and restraining and enjoining Prime Time, Arnold, and Mattera from violating Sections 5(a) and 5(c) ofthe Securities Act.
III. Disgorgement
Issue an Order directing Mattera to disgorge all profits or proceeds that he received as a result o f the acts and/or courses o f conduct complained o f herein, with prejudgment interest.
IV. Penalties
Issue an Order directing all Defendants to pay civil money penalties pursuant to Section 20(d) of the Securities Act, 15 U.S.C. § 77t(d), and Section 21(d) of the Exchange Act, 15 U.S.C. § 78u(d).
V. Penny Stock Bars
Issue an Order pursuant to Section 21(d)(6) ofthe Exchange Act, 15 U.S.C. § 78u(d)(6), and Section 20(g)(1) of the Securities Act, 15 U.S.C. § 77t(g)(1), permanently barring Arnold, Robinson, Metz, and Mattera from participating in any offering ofany penny stock.
VI. Further Relief
Grant such other and further relief as may be necessary and appropriate.
Respectfully submitted,
June 25, 2009
By:
Christopher Martin, Esq.
Senior Trial Counsel
SD Fla. Bar. No. A5500747
Direct Dial: (305) 982-6386
E-mail: martinc@sec.gov
Laura R. Smith, Esq.
Senior Counsel
California Bar No. 205159
Direct Dial: (305) 982-6387
E-mail: smithla@sec.gov
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
801 Brickell Avenue, Suite 1800
Miami, Florida 33131
Telephone: (305)982-6300
Facsimile: (305) 536-4154
RESULTS OF LITIGATION:
http://www.sec.gov/litigation/litreleases/2010/lr21627.htm
FINAL JUDGMENTS OF PERMANENT INJUNCTION AND OTHER RELIEF ENTERED AGAINST DEFENDANTS DALLAS L. ROBINSON, TROY K. METZ AND JOHN A. MATTERA
Litigation Release No. 21627 / August 18, 2010
FINAL JUDGMENTS OF PERMANENT INJUNCTION AND OTHER RELIEF ENTERED AGAINST DEFENDANTS DALLAS L. ROBINSON, TROY K. METZ AND JOHN A. MATTERA
Securities and Exchange Commission v. Prime Time Group, Inc., et al., Civil Action No. 09-80952-CV-Cohn/Seltzer (S.D. Fla.)
The Commission announced that on August 9, 2010, the Honorable James I. Cohn, United States District Court Judge for the Southern District of Florida, entered final judgments of permanent injunction and other relief against Defendants Dallas L. Robinson, Troy K. Metz and John A. Mattera. The final judgments enjoin Robinson and Metz from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The final judgment as to Mattera enjoins him from violating Sections 5(a) and 5(c) of the Securities Act of 1933 and Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder. In addition to the injunctive relief, both Robinson and Metz consented to a civil penalty of $25,000 and a five year penny stock bar, and Mattera consented to paying disgorgement of $70,000, plus prejudgment interest of $8,799.94, a civil penalty of $70,000, and a permanent penny stock bar. Robinson, Metz and Mattera consented to the entry of the final judgments without admitting or denying any of the allegations in the complaint and have fully escrowed the amounts they are required to pay.
The Commission commenced this action by filing its complaint on June 25, 2009, against Robinson, Metz, Mattera and others alleging that they participated in a fraudulent scheme in violation of the federal securities laws.
http://www.sec.gov/litigation/litreleases/2010/lr21590.htm
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21590 / July 8, 2010
DEFAULT JUDGMENTS OF PERMANENT INJUNCTION AND OTHER RELIEF ENTERED AGAINST DEFENDANTS PRIME TIME GROUP, INC., n/k/a HUNT GOLD CORPORATION AND JOHNNY RAY ARNOLD
Securities and Exchange Commission v. Prime Time Group, Inc., et al., Civil Action No. 09-80952-CV-Cohn/Seltzer (S.D. Fla.)
The Commission announced that on May 25, 2010 and June 11th, the Honorable James I. Cohn, United States District Court Judge for the Southern District of Florida, entered default judgments of permanent injunction and other relief against Defendants Prime Time Group, Inc., n/k/a Hunt Gold Corporation (Prime Time) and Johnny Ray Arnold (Arnold), respectively. Prime Time and Arnold defaulted by failing to appear, answer or otherwise plead in response to the Commission's complaint. The default judgments permanently enjoin Prime Time and Arnold from future violations of Sections 5(a) and 5(c) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. In addition, Arnold is barred from participating in the offering of any penny stock. The default judgments order Prime Time and Arnold to pay civil money penalties, in an amount to be determined at a later date.
On June 25, 2009, the Commission filed its complaint against Prime Time, Arnold and others alleging that they participated in a fraudulent scheme to evade the registration requirements of the securities laws and antifraud violations.
http://www.stockwatch.com/News/Item.aspx?bid=Z-C:*SEC-1747540&symbol=*SEC&news_region=C
SEC secures $199,000 (U.S.) in penalties for Prime Time
2010-08-09 14:36 ET - Street Wire
Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission
Also Street Wire (U-HGLC) Hunt Gold Corp
by Mike Caswell
The U.S. Securities and Exchange Commission has negotiated penny stock bans and $199,000 in penalties against three defendants in the Prime Time Group Inc. fraud. (All figures are in U.S. dollars.) The SEC claimed that the men, including Vancouver's Dallas Robinson, were officers or shareholders of Prime Time Group when it issued several misleading news releases in 2006 and 2007. Among other things, the company touted a 7-Eleven chain in Puerto Rico that it did not entirely own.
The case had been headed for trial in Florida, but Mr. Robinson and the others agreed to settle before the hearing. Details of the settlements are contained in motions for final penalties the SEC filed on Aug. 6, 2010. According to the motions Mr. Robinson, who was Prime Time's president, has agreed to pay a $25,000 civil fine and has agreed to serve a five-year penny stock ban. The other Canadian defendant, Saskatchewan resident Troy Metz, negotiated an identical deal to that of Mr. Robinson. He had been the company's chief executive officer for part of the scheme.
The largest settlement was with the third defendant, John Mattera, a Florida man who received millions of Prime Time shares based on fraudulently backdated notes. He agreed to pay a $70,000 civil penalty and to disgorge $70,000 in illicit profits, plus interest. He also agreed to a permanent penny stock ban. None of the men admitted to any wrongdoing in settling the case.
With the settlements, the only outstanding defendant is Johnny Ray Arnold, a Florida man who was Prime Time's chairman. The SEC won a default judgment against him on June 11, 2010, after he failed to answer the charges. The judge banned him from penny stocks for life, and invited the SEC to make submissions on an appropriate financial penalty.
SEC's complaint
The case began on June 25, 2009, when the SEC filed a civil complaint against the men in the Southern District of Florida. The complaint identified several businesses that Prime Time touted with misleading or outright false information in 2006 and 2007. These included a 7-Eleven chain, a cellphone accessory business and a rent-to-own car enterprise.
The first business was the 7-Eleven chain in Puerto Rico, which Prime Time acquired in August, 2005. The SEC said Prime Time failed to disclose that in acquiring the chain, it had to pledge a 92-per-cent interest in the stores as collateral for a loan. In April, 2006, Prime Time defaulted on that loan and its interest in the stores fell to 8 per cent. Prime Time did not tell investors about the loss, and even issued news releases about revenues from the chain, the complaint stated.
The company's next business was a wireless division in Canada. In October, 2006, Prime Time acquired Robinson Wireless Inc., a private company that purportedly had exclusive marketing agreements with Virgin Mobile, Fido and T-Mobile. These deals, according to the SEC, did not exist. The company had no agreements at all with T-Mobile and Fido, and it only had an agreement in principle with Virgin.
Prime Time started issuing news touting another deal in January, 2007, when it said it had acquired Xpress Your Cell USA LLC, a cellphone accessory company. Prime Time actually had no agreement to acquire Xpress Your Cell, the SEC said. The company had been negotiating the acquisition, but only had a deal that permitted further negotiations.
According to the complaint, more misleading news came in May, 2007, when Prime Time announced that it had acquired Southern Wheel Workz Inc., a company that sold cars on a rent-to-own basis. As with its prior purported acquisition, Prime Time had no agreement to acquire Southern Wheel, the SEC claimed.
In addition to the news releases, the SEC said that Mr. Mattera and Mr. Arnold carried out a bogus promissory note scheme, in which Mr. Mattera obtained 44 million free-trading share of Prime Time. The company issued the shares based on three nearly identical notes dated May, August and September, 2005, which purportedly represented loans totalling $560,000. The problem, as the SEC saw it, was that Mr. Arnold and Mr. Mattera had not met in 2005. Also, the lender, a private company called Mattera Reserve, did not exist in 2005.
The SEC sought appropriate civil penalties and penny stock bans against all four men, and disgorgement of profits against Mr. Mattera. The regulator acknowledged the assistance of the B.C. Securities Commission in filing the case.
Assuming the judge approves the settlements with Mr. Robinson, Mr. Metz and Mr. Mattera, the only remaining matter will be the size of Mr. Arnold's fine.
Prime Time, which traded as high as 45 cents during the scheme, has since rolled back 1:3,000 and changed its name to Hunt Gold Corp. It last traded for 0.01 cent.
http://www.stockwatch.com/News/Item.aspx?bid=Z-C:*SEC-1747540&symbol=*SEC&news_region=C
Followers
|
7
|
Posters
|
|
Posts (Today)
|
0
|
Posts (Total)
|
21
|
Created
|
11/19/11
|
Type
|
Free
|
Moderators |
This forum is dedicated to research on John Andrew Mattera of Boca Raton and his accomplices.
This forum was set up to help uncover and share information about John A Mattera and his criminal activities and to help the victims of his crimes.
John Mattera is a former Boca Raton chiropractor. In 1991 the Browland County Sheriff's office hired John Mattera to conduct physicals for the police force, a move that sparked some controversy about whether chiropractors are qualified to conduct physical exams. In 1995 John Mattera's chiropractic license was suspended.
In March 1998, John Mattera was accused of bilking several doctors out of thousands of dollars of advance fees for loans they never received. Mattera was charged with organized fraud, operating as an unlicensed mortgage broker, six counts of grand theft and six counts of unlawful taking of advance fees. _________ was charged with grand theft and six counts of unlawful taking of advance fees, and Carl Coccaro was charged with organized fraud, authorities said. Investigators said Mattera operated The Givens Group Inc from his home in the 10500 block of Harich Lane, west of Boca Raton. He sent faxes to doctors across the country offering loans to buy clinics and equipment. But they had to sign a pre-loan agreement and wire upfront fees ranging from $2,500 to $5,000 to the group's bank account. None of the six doctors who paid the fees received loans. _________, who was Mattera's live in girlfriend at the time, had all charges dropped because it was proven in court that Mattera had forged her name on all relevant documents. Mattera ended up pleaded guilty to operating an unlicensed mortgage brokerage firm and was sentenced to one year of probation and ordered to pay restitution to the victims.
In December 2000, a federal judge awarded a dozen Texans a $1.2 million judgment after Mattera and Praetorian failed to appear and defaulted on a lawsuit that claimed Mattera owed them more than $100,000.
In 2001, Palm Beach County Sheriff's Office arrested John Mattera for investment fraud. Mattera was accused of stealing more than $90,000 from an investment client. Mattera agreed to purchase 50,000 shares of stock from a Bonita Springs man, but never ended up paying the man after receiving the stock. A review of Mattera's trading records showed that Mattera sold the stock for his own personal gain. Mattera was charged with 4 counts of grand theft, four counts of advance fee fraud, and taking part in an organized scheme to defraud. Mattera pleaded guilty and served probation.
A judgment was entered against Mattera in the amount of $117,447.28 on November 15, 2002 for breach of contract; breach of the implied covenant of good faith and fair dealing; fraud; securities fraud; and constructive trust in connection with a stock purchase agreement between John Mattera and Hyperbaric Systems in which Mattera through his clearing trust company took 400,000 shares of Hyperbaric Systems without ever making the promised $104,000 payment.
According to reports by CitronResearch, Mattera controlled an offshore entity named Aurora Two Ltd. Aurora Two Ltd. signed regulation S financing agreements with three publicly traded entities in November of 2003 - Epic Financial Corp, Legal Access Technologies Inc, and World Information Technology Inc. In all three cases, Aurora Two Ltd. was issued between 8,000,000 - 12,000,000 shares of stock in advance of the funding, but the financing was never received. In the case of Epic Financial Corp and Legal Access Technologies Inc, filings say that the stock issued to Aurora Two Ltd was subsequently canceled.
John Mattera, pleaded guilty in 2003 to seven counts of grand theft in three separate Florida criminal cases, according to court records. Among other things, Mattera stole $34,000 from two Florida investors by promising to provide them with shares of stock that Mattera falsely represented he owned.
Boca Raton cops arrested Mattera on St. Patrick's Day 2008, after a night out at Mizner Park turned into a violent, boozy bender, police records show. Paramedics called to his home found Mattera unresponsive in a pool of vomit and feces. When he awoke, Mattera attacked a fire-rescue captain, resulting in his being tased by police, the arrest report says. The charges were later dropped.
In 2009, the SEC charged Mattera for his role with Prime Time Group Inc (nka Hunt Gold Corp) "with fraudulently attempting to avoid registration requirements by backdating promissory notes to obtain improperly unrestricted shares of a company" according to the agency. For his role with Prime Time Group Inc, John Mattera was banned from penny stocks and agreed to pay nearly $150,000 in fines, court records show.
SEC litigation release
SEC Complaint in this Matter
Final Judgment against Mattera in this Matter
And now Mattera, 50, has been arrested and sued civilly by the SEC and charged criminally by federal prosecutors in New York in yet another alleged scheme - this one involving fake pre-IPO shares in Groupon, Facebook and others in a scam netting between $11 million and $12.6 million.
The scam included a fraudalent private placement memorandum for preferred stock in Fisker Automotive Inc that Mattera didn't really own. Mattera collected $4.5 million in the fake Fisker share offering alone. According to a criminal complaint unsealed in federal court Thursday Mattera blew at least $4 million of his victims' money on expensive jewelry, interior decorating and luxury cars.
SEC news release
SEC litigation release
SEC Complaint in this Matter
Mattera surrendered to federal authorities in his Fort Lauderdale home Thursday morning, charged with securities fraud, wire fraud and money laundering. Expenditures included $825,000 at a local car dealership, $330,000 at jewelry stores, and $245,000 for home furnishing services. Mattera also is said to have written $1.8 million in checks to himself, mother Ann Mattera, and wife Lan Phan, a Broward-based osteopathic physician.
John Mattera has been sued repeatedly in county and federal court, and many of the complaints against him echo the most recent allegations.
Through the Mattera Foundation, Mattera paid for Florida Atlantic University's weekly football fan breakfast with legendary coach Howard Schnellenberger in 2010, although the athletic department refused his support this past year when word of his legal troubles first emerged.
Mattera also had served on the American Red Cross of Southern Florida's Broward County board but was asked to leave following a report on his alleged improprieties.
Johnny Ray Arnold was an accomplice in both the Prime Time Group Inc scam and the fake pre-IPO scam. In the pre-IPO scam money was funneled into First American Service Transmittal, a title company owned by Johnny Ray Arnold. First American was supposed to hold the payments in escrow until the buyers received the shares. But they never arrived, and the money vanished from these accounts - Johnny Arnold passed the money along to himself and to John Mattera, as well as to accounts registered to Mattera's mother and wife, the complaint said.
Johnny Ray Arnold was an officer and director of Prime Time Group Inc during the scandalous activities. The SEC complaint said that Arnold participated in drafting and reviewing Prime Time's press releases and also participated in a fraudulent scheme to backdate promissory notes and participated in the unregistered distribution of Prime Time stock to Mattera. For his role in the Prime Time Group scam, Arnold was banned from penny stocks for life
To attract clients, John Mattera allegedly enlisted the help of Joseph Almazon, an unregistered broker with Spartan Capital Partners on Long Island, who solicited investments for Mattera's Praetorian funds using LinkedIn advertisements that offered customers "the opportunity to buy pre-I.P.O. shares" in Facebook, Groupon, Twitter, Zynga and other companies. Mr. Almazon promised that "unlike most of the other investment banking firms, we let you sell your shares right at the open" - referring to the first day the company goes public, according to the civil action. Joseph Almazon is currently the Assistant Vice President of Sales at Conrad Capital in New York.
In May of 2011, Joseph Almazon was arrest for his role in participating in the Kegs and Eggs riot. Almazon was charged with Criminal possession of a weapon, rioting, resisting arrest, reckless endangerment. Almazon accepted a plea agreement that allowed him to avoid jail time.
According to the complaint, Van Siclen and Howard participated with Mattera in soliciting investments and were each actively involved in providing false documents and information to potential investors. The complaint further alleges that Van Siclen drafted the subscription agreement and private placement memorandum each of which contained false representations and misled investors into believing that their funds would be safely held in escrow.
Bradford Van Siclen, 43, of Montclair, N.J., currently holds an officer and director position in Saudi American Holdings Corp which is a publicly traded entity on the pink sheets under the ticker (SAHN).
In March of 2011, David E. Howard II, 32, of New York City, was named in SEC litigation for his role in a Los Angeles based boiler room scam that defrauded almost 200 investors out of nearly $3 million in 2007 and 2008. Howard and his cohorts used telemarketers and high pressure sell tactics to get investors to purchase unregistered securities through Flatiron Capital and Flatiron Systems based on misleading statements. The Flatiron entities were not registered dealers and their highly touted investment strategies failed. Howard misappropriated nearly $500,000 in investor funds, over $300,000 of which he used for personal expenses, including travel, personal and adult entertainment, and gifts for his girlfriend.
In July of 2011, David E. Howard II was charged in an off-exchange currency scam with two other people (Susan G. Davis and Joseph Burgos). The CTFC complaint alleges that beginning in at least April of 2009, Davis, Howard, Burgos, and their companies, Forex Group, Forex Partners, and Highland Sone, fraudulently solicited cusomters to trade forex through accounts that the defendants managed at one of two foreign retail forex dealers. In soliciting customers, the defendants allegedly falsely claimed incredible profits spanning several years on their firms' repective websites and elsewhere.
There are also unconfirmed reports that David E. Howard II has a past felony conviction in Arizona related to drug charges.
John Hartley was named in a lawsuit being brought by American multi-millionaire R.D Hubbard who is being represented by Edward Burger. The lawsuit claims that Hartley played a key role in soliciting funds for the fake Fisker preferred shares.
Robinson and Metz were both officers of Prime Time Group Inc at the time that the scandalous activities took place. According to the Prime Time Group Inc complaint, Robinson and Metz were both actively involved in the dissemination of materially false and misleading press releases to the public while the improperly issued free trading shares held by Mattera were being sold into the market. For their roles in the Prime Time Group scam, Robinson and Metz were each agreed to pay a $25,000 civil penalty and a 5 year penny stock ban.
Anybody with any information about John Mattera or any of the above named accomplices or any of John Mattera's other business associates in South Florida, Long Island, Vancouver, and Orange County, CA that is not already publicly known information please use this forum to share your information to help the regulators and the victims. If you are not comfortable posting your information in public please feel free to send me a private message. For non paying IHUB users without the private message option, you can email information to the following email address - brigham.youngster@yahoo.com. 100% confidentiality guaranteed.
Information can also be sent to the following journalists who are closely following the developments of the current case:
Kevin Gale of the South Florida Business Journal
Adam Beasley of the Miami Herald
David Winzelberg of Long Island Business News
David Baines of The Vancouver Sun
Mike Caswell of Stockwatch
Thanks to anyone who replies.
Volume | |
Day Range: | |
Bid Price | |
Ask Price | |
Last Trade Time: |