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SEC secures $199,000 (U.S.) in penalties for Prime Time

2010-08-09 14:36 ET - Street Wire
Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission
Also Street Wire (U-HGLC) Hunt Gold Corp
by Mike Caswell
http://www.stockwatch.com/News/Item.aspx?bid=Z-C:*SEC-1747540&symbol=*SEC&news_region=C

The U.S. Securities and Exchange Commission has negotiated penny stock bans and $199,000 in penalties against three defendants in the Prime Time Group Inc. fraud. (All figures are in U.S. dollars.) The SEC claimed that the men, including Vancouver's Dallas Robinson, were officers or shareholders of Prime Time Group when it issued several misleading news releases in 2006 and 2007. Among other things, the company touted a 7-Eleven chain in Puerto Rico that it did not entirely own.

The case had been headed for trial in Florida, but Mr. Robinson and the others agreed to settle before the hearing. Details of the settlements are contained in motions for final penalties the SEC filed on Aug. 6, 2010. According to the motions Mr. Robinson, who was Prime Time's president, has agreed to pay a $25,000 civil fine and has agreed to serve a five-year penny stock ban. The other Canadian defendant, Saskatchewan resident Troy Metz, negotiated an identical deal to that of Mr. Robinson. He had been the company's chief executive officer for part of the scheme.

The largest settlement was with the third defendant, John Mattera, a Florida man who received millions of Prime Time shares based on fraudulently backdated notes. He agreed to pay a $70,000 civil penalty and to disgorge $70,000 in illicit profits, plus interest. He also agreed to a permanent penny stock ban. None of the men admitted to any wrongdoing in settling the case.

With the settlements, the only outstanding defendant is Johnny Ray Arnold, a Florida man who was Prime Time's chairman. The SEC won a default judgment against him on June 11, 2010, after he failed to answer the charges. The judge banned him from penny stocks for life, and invited the SEC to make submissions on an appropriate financial penalty.

SEC's complaint

The case began on June 25, 2009, when the SEC filed a civil complaint against the men in the Southern District of Florida. The complaint identified several businesses that Prime Time touted with misleading or outright false information in 2006 and 2007. These included a 7-Eleven chain, a cellphone accessory business and a rent-to-own car enterprise.

The first business was the 7-Eleven chain in Puerto Rico, which Prime Time acquired in August, 2005. The SEC said Prime Time failed to disclose that in acquiring the chain, it had to pledge a 92-per-cent interest in the stores as collateral for a loan. In April, 2006, Prime Time defaulted on that loan and its interest in the stores fell to 8 per cent. Prime Time did not tell investors about the loss, and even issued news releases about revenues from the chain, the complaint stated.

The company's next business was a wireless division in Canada. In October, 2006, Prime Time acquired Robinson Wireless Inc., a private company that purportedly had exclusive marketing agreements with Virgin Mobile, Fido and T-Mobile. These deals, according to the SEC, did not exist. The company had no agreements at all with T-Mobile and Fido, and it only had an agreement in principle with Virgin.

Prime Time started issuing news touting another deal in January, 2007, when it said it had acquired Xpress Your Cell USA LLC, a cellphone accessory company. Prime Time actually had no agreement to acquire Xpress Your Cell, the SEC said. The company had been negotiating the acquisition, but only had a deal that permitted further negotiations.

According to the complaint, more misleading news came in May, 2007, when Prime Time announced that it had acquired Southern Wheel Workz Inc., a company that sold cars on a rent-to-own basis. As with its prior purported acquisition, Prime Time had no agreement to acquire Southern Wheel, the SEC claimed.

In addition to the news releases, the SEC said that Mr. Mattera and Mr. Arnold carried out a bogus promissory note scheme, in which Mr. Mattera obtained 44 million free-trading share of Prime Time. The company issued the shares based on three nearly identical notes dated May, August and September, 2005, which purportedly represented loans totalling $560,000. The problem, as the SEC saw it, was that Mr. Arnold and Mr. Mattera had not met in 2005. Also, the lender, a private company called Mattera Reserve, did not exist in 2005.

The SEC sought appropriate civil penalties and penny stock bans against all four men, and disgorgement of profits against Mr. Mattera. The regulator acknowledged the assistance of the B.C. Securities Commission in filing the case.

Assuming the judge approves the settlements with Mr. Robinson, Mr. Metz and Mr. Mattera, the only remaining matter will be the size of Mr. Arnold's fine.

Prime Time, which traded as high as 45 cents during the scheme, has since rolled back 1:3,000 and changed its name to Hunt Gold Corp. It last traded for 0.01 cent.

http://www.stockwatch.com/News/Item.aspx?bid=Z-C:*SEC-1747540&symbol=*SEC&news_region=C




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