Pervasip Corp (PVSP)

[Arthur]

I have 2 SEC pennny stock cases for you:

Securities and Exchange Commission v. K&L International Enterprises, Inc., et al., Case No. 6:09-CV-1638-Orl-31KRS (M.D. Fla.)
http://www.sec.gov/litigation/litreleases/2009/lr21231.htm

According to the complaint, the scheme involved a series of transactions between the Stock Distributors and the microcap companies, including Enzyme Environmental (the Issuers), with the same essential characteristics:
-First, a Stock Distributor either purported to lend money to an Issuer or the Issuer identified a "debt" owed to its officer that the Issuer and officer assigned to the Stock Distributor.
-Second, to reduce or eliminate the loan or the assigned debt, the Issuer issued shares of its stock to the Stock Distributor.
-Third, before or after the stock issuances, the Stock Distributor paid the Issuer or an affiliate of the Issuer.
-Finally, the Stock Distributor immediately sold the shares into the public market.
In two years, the Stock Distributors generated approximately $7 million in illegal profits, the complaint alleged.

And, of course, the Gendarme case, not fully applicable to PVSP so far:
Securities and Exchange Commission v. Gendarme Capital Corp., et al., Case No. 2:11-cv-00053-FCD-KJN (E.D. CA filed January 6, 2011)
http://www.sec.gov/litigation/litreleases/2011/lr21798.htm

The SEC alleges that Gendarme repeatedly acquired deeply discounted shares from penny stock issuers under the pretense of a long-term investment and then dumped the shares into the market, essentially effecting public stock distributions without complying with the disclosure requirements of the federal securities laws.
(...)
Gendarme began entering into agreements with penny stock issuers in early 2008. The agreements gave Gendarme the right to purchase stock at 30 to 50 percent discounts to the market price. The SEC alleges that, in an effort to avoid the registration and disclosure obligations of the federal securities laws, Gendarme falsely represented to issuers that it was purchasing shares for “investment purposes only.” Contrary to those representations, Gendarme quickly dumped most of these shares on the public markets, profiting by more than $1.6 million from its unregistered stock distributions.