Windswept Environmental Systems, Inc. (fka WEGI)

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I was not aware previous CFO of WindSwept was involved in SEC investigation. Sorry > I thought it was viable topic for discussion being Windswept has obviously come a LONG way since the late 90s' and these investigations. VERY enlightening article you posted - I appreciate you posting it - I for one enjoy reading stories like this.

Good to know these folks are no longer associated with WindSwept. FYI > Here is what SEC was alledging >

http://sec.gov/litigation/admin/34-47907.htm

On November 10, 1999, the Commission filed a complaint ("Complaint") against Behanna and sixteen others, SEC v. Curtis, et al., 99 CV 7357 (E.D.N.Y.), alleging, in relevant part, as follows:

1. From at least 1994 through 1996, defendants Grant R. Curtis ("Curtis"), Timothy H. Masley ("Masley") and Leo Mangan ("Mangan") (collectively, "the Trio"), acting as a partnership, masterminded and engaged in a fraudulent scheme to exercise undisclosed control over Windswept and two other public companies and used that control to retail stock of those companies illegally at inflated prices to the public. The Trio caused Windswept to issue an aggregate of over 4 million shares of its common stock to various foreign shell companies, nearly all of which were under the control of the Trio. Approximately 3.4 million of the 4 million shares of Windswept stock issued to the foreign shell companies were sold to the investing public for approximately $5 million. Behanna and other defendants, acting at the direction of the Trio, engaged in conduct which furthered the scheme.

2. With respect to the issuance of the Windswept stock, the Complaint further alleges, among other things, as follows:

a. In March 1995, Windswept issued a total of 200,000 shares of stock to Piedmont Securities, Ltd. ("Piedmont"), an Irish shell company, and filed with the Commission a Form S-8 Registration Statement, signed by Behanna, which purported to register 500,000 shares of Windswept common stock, including the 200,000 shares issued to Piedmont. Behanna signed the corporate resolution authorizing the issuance of the stock to Piedmont. Piedmont never performed any services for Windswept and never paid any consideration for the 200,000 shares of Windswept stock.

b. From May 1995 through May 1996, Windswept issued a total of 2,800,000 shares of unregistered stock in three transactions to Hersilia Investments, Ltd., a British Virgin Islands corporation, and the Hersilia Trust, located in Guernsey, Channel Islands (collectively "Hersilia"). Those transactions purportedly fell within a safe harbor exemption from the registration requirements of the Securities Act provided by Regulation S for offers and sales of securities to foreign persons that occur outside the United States. 17 C.F.R. § 230.901 et seq. Hersilia, however, was controlled by the Trio. Windswept did not receive full consideration for the stock issued to Hersilia.

c. In July 1996, Windswept issued 115,000 shares to Broadcast Communications, Inc. ("Broadcast"), a Liberian company. This stock was purportedly registered on a Form S-8 Registration Statement filed with the Commission on December 21, 1995, which Behanna signed. Broadcast was a nominee for defendant Donald Kessler ("Kessler"), Windswept's then president, chairman, and CEO. Broadcast did not provide any services to Windswept.

d. None of these issuances of Windswept stock described above were properly registered with the Commission or exempt from registration. Most of the stock issued was sold to the public.

3. Behanna, as CFO and through his involvement in Windswept's day-to-day operations, knew, or was reckless in not knowing, that Windswept was controlled by the Trio; that the Trio controlled Piedmont and Hersilia; that Kessler controlled Broadcast; and that Windswept received no consideration for the stock it issued to Piedmont and Broadcast and less than full consideration for the stock it issued to Hersilia. Further, in light of his position and involvement with Windswept, Behanna was a controlling person of Windswept.

4. Windswept's Form 10-K for its fiscal year ended April 30, 1995, its quarterly and annual filings for its fiscal year ended April 30, 1996, and its Form 10-Q for its quarter ended July, 1996, which were all signed by Behanna and filed with the Commission, contained materially false and misleading statements because they failed to disclose, among other things, that (i) Curtis and Masley were control persons of Windswept; (ii) Curtis had been convicted of a felony within the past five years; (iii) the stock issuances to the foreign shell companies were related party transactions; and (iv) the foreign shell companies had performed no services or paid little or no consideration for the stock issued to them.

5. Windswept's books and records, including corporate resolutions, falsely reflected stock issuances to the foreign shell companies, as described above, when, in fact, the members of the Trio and/or Kessler were the true recipients of the stock, and Windswept received little or no consideration for the stock. Windswept failed to adopt internal accounting controls sufficient to accurately reflect that Windswept stock was issued, for little or no consideration, to various nominees and aliases of the Trio and/or Kessler in related party transactions.

6. Behanna and others failed to disclose material facts to accountants in connection with the preparation and filing of documents and reports filed with the Commission, as set forth above, and failed to disclose material facts to accountants in connection with an audit of Windswept's financial statements.