Recent Sedar Documents
SEC seeks summary judgment for AVL's Fisher
2010-12-07 14:15 ET - Street Wire
Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission
Also Street Wire (U-AVLL) AVL Global Inc
by Mike Caswell
The U.S. Securities and Exchange Commission has asked a Detroit judge to fine and ban Ontario resident Peter Fisher for the AVL Global Inc. manipulation, without a trial. In a motion for summary judgment filed on Dec. 3, 2010, the SEC says there is no dispute that Mr. Fisher received millions of illegally issued AVL shares, which he sold after paying a Miami spammer to promote the company. Mr. Fisher admitted to "essential elements of an illegal scheme" during pretrial testimony, the motion states.
The civil case against Mr. Fisher has been outstanding for over three years while a criminal hearing proceeded against one of his co-defendants, Texas lawyer Phillip Offill. During a 10-day trial in January, 2010, Virginia prosecutors argued that Mr. Offill helped insiders of nine public companies, including AVL Global, obtain illegally issued free-trading shares. A jury convicted Mr. Offill of the charges, and on April 23, 2010, the judge sentenced him to eight years. Mr. Offill has since appealed the conviction.
In seeking the summary judgment against Mr. Fisher, the SEC says he admitted to receiving shares that Mr. Offill had obtained. One of the documents the SEC presented as evidence is an e-mail that Mr. Fisher wrote to a promoter, in which he boasted that he owned more than 99 per cent of AVL's tradable stock.
The SEC says there is also no dispute that Mr. Fisher wrote several misleading news releases about the company. These included one which suggested that AVL could sell thousands of vehicle tracking devices in Botswana. At the time he wrote the news release, Mr. Fisher knew that a test of the devices had failed. Another news release falsely stated that the company knew nothing about a fax spamming campaign, when Mr. Fisher had actually paid for the faxes, the motion states.
The SEC is asking that the judge impose a third tier civil penalty against Mr. Fisher, which could be $120,000 or more. (All figures are in U.S. dollars.) The motion also requests disgorgement of $193,418 in ill-gotten gains, and orders banning Mr. Fisher from participating in penny stock offerings and from serving as an officer or director of a public company.
SEC's complaint
The SEC initially filed a civil complaint against Mr. Fisher, Mr. Offill and others on June 11, 2007, in the Eastern District of Michigan. The complaint identified Mr. Fisher, 64, as a Canadian citizen living in Ontario, and Mr. Offill, 51, as a Texas lawyer. The other defendants were Mr. Fisher's son, Tyler, who served as AVL Global's president, and an Arizona lawyer, David Stocker, who wrote opinion letters authorizing the issuance of millions of free-trading AVL shares.
According to the complaint, the Fishers incorporated AVL Global in April, 2004, as a manufacturer of vehicle tracking devices. As part of the scheme, Mr. Fisher and his son caused the company to issue 15 million shares, purportedly to arm's-length investors. In reality, an investment company controlled by Mr. Offill bought the stock. Mr. Stocker then wrote opinion letters removing trading restrictions on the stock, and transferred the shares from Mr. Offill's company to Mr. Fisher, the complaint stated.
The promotion began in October, 2004, when the Fishers hired an unidentified Florida man to tout AVL. Mr. Fisher paid the promoter one million free-trading shares from his personal account to carry out a fax and phone campaign, which would be timed to coincide with misleading news releases, the SEC claimed.
One of the releases, dated Dec. 2, 2005, stated that the government of Botswana was testing the company's tracking devices, and that a successful test could result in an order of 3,000 to 5,000 units. The SEC said the statement was false and misleading, as AVL's distributor in Africa had previously tested the units in Botswana, and had determined that the country lacked proper satellite coverage.
Another release, dated Feb. 3, 2005, stated that the company had experienced "a dramatic increase for its tracking services" and that its earnings would improve as a result. The release failed to disclose that the company had abandoned its tracking business and had no meaningful operations, the complaint stated. The company had also laid off all but one employee by this time.
The stock climbed to a $4.10 high on Dec. 16, 2004, and fell to 38 cents by Feb. 28, 2005. The SEC said that Peter Fisher directly sold 66,000 shares during the promotion. He also distributed millions of shares to family and business associates, some of which were sold as well. The regulator sought appropriate civil penalties, disgorgement of ill-gotten gains and bans against each defendant.
Settlements
Mr. Fisher's son, Tyler, settled the case shortly after it was filed. Without admitting any wrongdoing, he agreed to pay $25,000 and to serve a five-year penny stock ban and a permanent officer and director ban.
Mr. Stocker settled the AVL case in May, 2009, as part of an agreement in which he settled several SEC cases. He agreed to disgorge $1.4-million in illegitimate gains. He also faced a parallel criminal case, in which he pleaded guilty to charges stemming from improperly issued shares of AVL Global and other companies. He received a 33-month sentence.
Mr. Fisher filed an answer to the case on April 11, 2008, in which he generally denied any wrongdoing and sought a trial by jury. He also filed a motion to dismiss the case on Aug. 28, 2007, in which he said that he relied on opinions from more than one lawyer in the share transaction. There was no reason for him to believe his stock was improperly issued, he claimed. The judge denied the motion on March 27, 2008, ruling that Mr. Fisher was portrayed as a leader in a securities fraud scheme, and must defend the complaint on that basis.
The judge has not set a date to hear the SEC's motion for summary judgment, and Mr. Fisher has not responded
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