Bioelectronics Corp (BIEL)

[4toSchool]

FALSE CLAIM: The SEC clearly disagreed with KW's testimony when they stated that Kelly "ill-gotten gains" Whelan made a nominal, one-time, and undocumented investment in IBEX and never put additional capital at risk".

THE DIVISION OF ENFORCEMENT’S POST-HEARING BRIEF, Pages 18-19
found at this link.

Kelly Whelan personally became wealthy at the expense of uninformed public shareholders. After initially financing IBEX with her own limited assets, Kelly Whelan “bec[a]me very liquid” in 2009 by selling BIEL stock. In 2010, Kelly Whelan had $3.8 million in the bank, “most of” which was the result of sales of BIEL shares. Kelly Whelan used the proceeds of her sales of BIEL convertible notes and shares to fund further monies made available to BIEL, and continued to make loans because the accrual of interest at eight percent and the sales of BIEL securities were profitable to her. Other than her initial (undocumented and nominal) investment, Kelly Whelan never took on any additional investment risk; She simply took the proceeds of sales of BIEL securities and immediately reinvested them in BIEL, effectively replacing the shares sold, with an ability to obtain shares in the future. Despite profiting personally from her sales of BIEL shares and using those sales to fund BIEL’s operating expenses—all while BIEL’s share value was plummeting—Kelly Whelan exhibited no concern for BIEL’s public shareholders, whose interest were being diluted every time BIEL authorized additional shares to provide for IBEX’s conversion rights. Indeed, in the face of the purported DTC chill, Ms. Whelan’s solution was not to stop distributing shares to the public market until the issue was resolved. Instead, she significantly increased the volume of her sales of BIEL convertible notes to Redwood Management, a company that she knew was in the business of buying debt, converting it into shares, and immediately selling to the public market. Despite the fact that Redwood Management could not have sold BIEL shares to investors without her participation in the chain of distribution, Ms. Whelan expressed no concern whatsoever for the impact of this conduct on the investing public, or her own role in getting BIEL shares to the market without registration statements.