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Thursday, February 05, 2015 12:46:01 PM
Being that you and "Randy" Goulding are so confident that this telephone interaction represents "coordination" with the SEC and "confirms" agreement by the Commission's to "move forward" with this multi-issuer share distribution scheme, I'm sure neither of you object to me submitting it to the SEC as well along with the many reasons I believe that the scheme intentionally misuses/abuses the Section 3(a)(10) exemption as well as the Illinois federal court in an attempt to circumvent registration requirements for billions of shares being issued from six penny stock companies to Goulding himself (through his law firm) and various other individuals and entities.
If one takes the time to read both his request for interpretive advice and his notes, it's obvious the SEC staff member did NOT agree with Goulding's expansive interpretation of the application of the Section 3(a)(10) exemption as Goulding proposed. His notes seem to be a defense of his actions probably anticipating such a defense will be needed. The hubris shown in his notes is amazing.
The only way to get confirmation that the SEC does not object to use of the Section 3(a)(10) exemption from registration in a particular situation is to request a "no-action" letter. Because such a request necessarily includes the specific facts and circumstances involved, such a letter does conclusively state that the SEC staff would not recommend enforcement action against the requester based on the specific facts represented in the request.
Although requesting a no-action letter is not required before using the Section 3(a)(10) exemption, it is certainly wise to do so, particularly in such a convoluted deal as this which falls relies on interpretations of the statute beyond its clear intent and historically-approved application.
It is revealing that Goulding chose not to describe to the SEC the specific facts involved in this scheme -- which enriches himself and several other individuals through the issuance of free-trading unregistered stock -- by formally requesting a no-action letter before taking the scheme to the court for approval of the share issuances. No doubt he knew no such letter would be issued.
Regardless of the legality of using the Section 3(a)(10) exemption, the scheme is massively dilutive and relies on false and/or misleading information about non-existent, non-licensed medical marijuna farms and completely unsupported, hypothetical income streams supposedly to be shared with the six companies (IJJP, TWDL, HALB, ENTI, CWIR and GEAR) in the event that the indoor farms are developed, licensed and create income.
IMO there are serious violations of securities laws by multiple participants who have conspired in the scheme and sought to misrepresent it. I would not be surprised to see eventual enforcement action against individuals as well as the companies involved.
FWIW, this is not the first time I've seen this exemption used (abused) to improperly issue free-trading shares of penny stock companies. I've been aware of no-action letters, which can be requested regarding many actions a company or individual proposes to take, for years.
http://www.sec.gov/answers/noaction.htm
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