PrimeGen Energy Corp. (PGNE)

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SEC settles with Wall Street Capital

2011-08-15 13:43 ET - Street Wire

Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission


by Mike Caswell

The U.S. Securities and Exchange Commission has reached a settlement with Wall Street Capital Funding LLC, a Florida tout service facing civil fraud charges for promoting questionable pink sheets companies. The SEC claimed that the firm issued overly optimistic recommendations for four companies in 2009 and 2010. They included a purported oil and gas explorer called PrimeGen Energy Corp., which had former Vancouver promoter William Scott Marshall as an officer. (The SEC did not name Mr. Marshall as a defendant or accuse him of any wrongdoing.)

According to the SEC, Wall Street Capital told investors that PrimeGen was a "stock to watch," despite the company being a "pure scam." Its corporate headquarters was a rented mail box in a UPS store, its phone line was unattended and its website was a copy of another company's site. The stock had a high of 38 cents during the touting, and was last at one cent. (All figures are in U.S. dollars.)

Details of the settlement, which covers Wall Street Capital and three people associated with the firm, are not yet available, as the SEC commissioners must first approve it. The SEC had sought orders banning the defendants from participating in penny stock offerings, as well as appropriate civil penalties. As in most settlements, the defendants will likely not admit to any wrongdoing.

In a joint motion filed on Thursday, Aug. 11, both sides asked that the judge stay pretrial proceedings while the SEC reviews the deal.

SEC's complaint

The case began on Feb. 7, 2011, when the SEC filed a civil complaint against Wall Street Capital and three others. The defendants included the firm's two owners, Beverly Hills resident Philip Cardwell, 47, and Miami resident Roy Campbell, 33. Also listed was one of the firm's employees, Aaron Hume, 32.

The SEC claimed that Wall Street Capital knowingly aided several penny stock scams during its 10-year existence. Besides PrimeGen, the SEC names three examples: Supatcha Resources Inc., Fidelis Energy Inc. and Caliber Energy Inc. (Of those four companies, three have links to Mr. Marshall. He was an officer of PrimeGen and Fidelis in 2007, while Supatcha listed him as a director in December, 2010.)Wall Street's touting of PrimeGen, as described in the complaint, occurred between April, 2009, and January, 2010. The firm issued as many as 50 misleading investment opinions, which it disseminated through newswires, the SEC claimed. A July 9, 2009, opinion listed it as a "stock to watch" along with three New York Stock Exchange listings, including Exxon Mobile Corp. The opinions typically repeated phony claims from the company's news releases, mostly purported drilling success in Russia, the SEC said.

Wall Street Capital also touted the company via spam, sending e-mails under headings such as "Revenues for PGNE to soar with newest 42 Well project" and "When PGNE explodes will you be there to enjoy the ride?" Wall Street Capital bought e-mail lists from third parties, which contained as many as 52 million addresses, the complaint stated. For its efforts, Wall Street Capital received five million shares of PrimeGen.

During the promotion, Wall Street Capital received more than one notification that PrimeGen was a questionable stock, the SEC said. It received an e-mail on Sept. 17, 2009, which stated that there are "serious concerns that the above Co. is acting fraudulently." Mr. Hume also viewed an Internet message board which stated that "PGNE is nothing more than a scam," the complaint stated.

Wall Street Capital's answer

Wall Street Capital, for its part, said it did nothing wrong. In a joint answer filed on Feb. 28, 2011, all of the defendants generally denied any wrongdoing, without providing many specifics. Wall Street Capital did admit that it received and sold shares of PrimeGen during the promotion, but said it had no duty to investigate the companies it promoted.

The defence also argued that there was no evidence that any of the stocks that Wall Street Capital promoted were fraudulent. If investors did suffer any losses, they were caused by market forces.

William Scott Marshall

While Mr. Marshall faces no charges from the scheme, he has been under investigation in Vancouver before. In 2004, the RCMP raided the office of Silver Star Energy Inc., an OTC Bulletin Board company. According to the search warrant, Mr. Marshall and five others ran the company as a pump-and-dump. The search made many headlines, but it did not lead to any charges.

Mr. Marshall left Vancouver in 2007, after somebody fired six shots at his Shaughnessy home.

http://www.stockwatch.com/News/Item.aspx?bid=Z-C:*SEC-1871786&symbol=*SEC&news_region=C