COLLUSION in a share selling scheme
For example, from March to September 2008, Gendarme entered into at least 11 warrant agreements with WGL Entertainment Holdings, Inc. (“WEHI”), which gave Gendarme the right to buy WEHI shares at a 30% discount to the market price at the time of purchase. The warrants represented that Gendarme would buy the WEHI shares for “investment purposes.” For each warrant, Armento wrote an opinion letter to WEHI’s stock transfer agent. Among other representations, the opinion letters asserted that the shares were issued to Gendarme in “an offering exempt from registration” and that Gendarme was not “an underwriter of the issuer.” From March to September 2008, Gendarme paid WEHI more than $615,000 for more than 6 billion shares purchased under the warrants. As Gendarme obtained WEHI shares, it sold most of them within days or weeks for gross sales of more than $780,000 and a profit of more than $165,000 through September 2008.
23.
In March 2009, WEHI changed its name to Heathrow Natural Food & Beverage, Inc. (“HRNF”). From then until March 2010, Gendarme purchased more than a billion HRNF
shares, and, during the same time, repeated the process of regularly dumping the shares on the market, for gross sales of more than $430,000 and a net profit of more than $230,000.
24.
From early 2008 to at least May 2010, Gendarme bought stock from at least 12 different issuing companies and distributed more than 15 billion shares in the public markets. None of the transactions was registered with the Commission. The transactions are summarized below.
a.
HRNF, formerly known as WEHI: From March to September 2008, Gendarme acquired WEHI shares from the issuer. During the same period, Gendarme sold more than 6 billion of these WEHI shares for more than $780,000. From March 2009 to March 2010, Gendarme acquired HRNF shares from the issuer. During the same period, Gendarme sold more than 1 billion of these HRNF shares for over $430,000.
