U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23989 / November 17, 2017
Securities and Exchange Commission v. David N. Fuselier, Roy W. Erwin and Integrated Freight Corporation, No. 17-cv-04240 (S.D.N.Y.)
SEC Obtains Judgment Against Microcap Issuer and former CEO
The Securities and Exchange Commission announced today that it has obtained final judgments against a publicly traded microcap issuer and its former chairman and CEO for an accounting scheme in which they defrauded investors by transferring significant liabilities to a related third party in sham transactions intended to conceal the company's financial condition and reduce its debt.
According to the SEC's complaint, filed June 6, 2017, defendant David N. Fuselier attempted to conceal defendant Integrated Freight Corporation's poor financial condition by selling several of the company's heavily indebted and non-performing subsidiaries to a related third party for nominal consideration. Fuselier allegedly concealed the true nature of these transfers from Integrated Freight Corporation's auditors and caused the company to file false and misleading disclosures relating to the transactions with the SEC between 2012 and 2015. The SEC also alleged that Fuselier signed materially false certifications regarding Integrated Freight Corporation's annual and quarterly reports. The SEC's complaint charged Fuselier with similar conduct at another company he controlled, New Leaf Brands, Inc.
Without admitting or denying the allegations in the Complaint, Fuselier consented to the entry of the final judgment enjoining him from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5, 13a-14(a), 13b2-1, and 13b2-2 thereunder, and from aiding and abetting further violations of Exchange Act Sections 13(a) and 13(b)(2)(A) and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder. In addition, the judgment bars Fuselier from serving as an officer or director of a public company and from participating in a penny stock offering. The judgment also orders Fuselier to pay disgorgement in the amount of $128,187.86, plus prejudgment interest thereon in the amount of $22,213.85, and a civil penalty in the amount of $150,000.
Without admitting or denying the allegations in the Complaint, Integrated Freight consented to the entry of the final judgment enjoining it from violating Securities Act Sections 17(a)(1) and (3), Exchange Act Sections 10(b), 13(a) and 13(b)(2)(A) and Rules 10b-5, 12b-20, 13a-1 and 13a-11 thereunder, and orders Integrated Freight to pay a civil penalty in the amount of $10,000.
On November 17, 2017, the SEC also issued an order revoking the registration of each class of securities of Integrated Freight registered with the Commission pursuant to Exchange Act Section 12(j).
For further information, see Litigation Release No. 23855 (June 8, 2017). https://www.sec.gov/litigation/litreleases/2017/lr23989.htm