Heathrow Nat. Food and Bev Inc. (fka HRNF)

[Arthur]

Heathrow Beverages was also involved in the Gendarme penny stock dilution case:

http://www.sec.gov/litigation/complaints/2011/comp21798.pdf

20. From early 2008 to at least May 2010, Gendarme bought stock from many Pink Sheets companies at a 30-50% discount to the market price. Rahimi and Lamphere jointly developed and executed Gendarme’s business strategy. Sometimes jointly, and other times individually, they made the decisions to purchase stock on Gendarme’s behalf. Each signed numerous agreements on Gendarme’s behalf to purchase issuer stock. Most of the agreements gave Gendarme warrants for up to one year in which Gendarme could elect to purchase the company’s stock. Other agreements were outright purchases of issuer stock. Within days or weeks of purchasing the stock, Rahimi or Lamphere caused Gendarme to resell most of the stock on the public market.

21. When it purchased shares from Pink Sheets issuers, Gendarme intended to, and did, sell shares to the public within a year. For those sales, Gendarme was an underwriter, and had no valid exemption from registration for the transactions.

22. For example, from March to September 2008, Gendarme entered into at least 11 warrant agreements with WGL Entertainment Holdings, Inc. (“WEHI”), which gave Gendarme the right to buy WEHI shares at a 30% discount to the market price at the time of purchase. The warrants represented that Gendarme would buy the WEHI shares for “investment purposes.” For each warrant, Armento wrote an opinion letter to WEHI’s stock transfer agent. Among other representations, the opinion letters asserted that the shares were issued to Gendarme in “an offering exempt from registration” and that Gendarme was not “an underwriter of the issuer.” From March to September 2008, Gendarme paid WEHI more than $615,000 for more than 6 billion shares purchased under the warrants. As Gendarme obtained WEHI shares, it sold most of them within days or weeks for gross sales of more than $780,000 and a profit of more than $165,000 through September 2008.

23. In March 2009, WEHI changed its name to Heathrow Natural Food & Beverage, Inc. (“HRNF”). From then until March 2010, Gendarme purchased more than a billion HRNF shares, and, during the same time, repeated the process of regularly dumping the shares on the market, for gross sales of more than $430,000 and a net profit of more than $230,000.