RNKE Charged- charges filed December 22, 2005 judgement
on Litigation Release No. 19873 / October 17, 2006
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
Securities And Exchange Commission v. Roanoke Technology Corp.
SEC Files Fraud Charges Against Roanoke Technology Corp. and its President for Sham S-8 Scheme
The Securities and Exchange Commission (SEC) announced that on December 21, 2005, it filed a complaint in federal district court in Orlando, Florida against Roanoke Technology Corp. (Roanoke), based in Rocky Mount, North Carolina, David L. Smith, Jr., Roanoke's chairman, chief executive officer and president and a resident of Roanoke Rapids, North Carolina, Thomas L. Bojadzijev of Orlando, Florida, and Barrett R. Clark of San Diego, California. The complaint alleges that the defendants participated in a scheme to illegally raise money for themselves by using Form S-8 registration statements. The complaint also names Sussex Avenue Partners LLC (Sussex) of Carlsbad, California as a relief defendant.
According to the complaint, from 2003 through October 2004, Smith had Roanoke issue over one billion shares, pursuant to several Form S-8 registration statements, to Bojadzijev and Clark, purportedly to compensate them for services provided to Roanoke. The complaint alleges that Bojadzijev and Clark raised over $7 million in liquidating these shares and funneled over $4 million to Smith, who used the funds for his own personal spending. Form S-8 registration statements permit the issuance of stock to consultants in certain circumstances to compensate them for legitimate services rendered. S-8 stock, however, cannot be used by the issuer, such as Roanoke, to raise capital for its control persons. The complaint also alleges that Smith caused Roanoke to issue a series of false and misleading press releases while Bojadzijev was selling stock into the market.
