Hail First Pharma (fka 499A)

[sunspotter]

Hail First Pharma was, as claimed by me and others, a pure fiction:

"SPPH SEC Litigation:

www.sec.gov/litigation/litreleases/2012/lr22574.htm

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 22574 / December 17, 2012

Securities and Exchange Commission v. Spencer Pharmaceutical Inc., Jean-François Amyot, Maximilien Arella, Ian Morrice, IAB Media Inc., and Hilbroy Advisory Inc., Civil Action No. 1:12-cv-12334 (D. Mass.)

The Securities and Exchange Commission filed an enforcement action on December 17, 2012, in federal court in Boston charging Spencer Pharmaceutical Inc., its officers, and several other parties for their roles in a “pump-and-dump” scheme involving Spencer’s stock. The Commission’s complaint alleges that Jean-François Amyot, a Canadian resident who controlled Spencer, orchestrated the scheme and worked with Maximilien Arella and Ian Morrice, Spencer’s officers and directors, as well as IAB Media Inc. and Hilbroy Advisory Inc., two other companies controlled by Amyot, to create and disseminate false press releases, including press releases about a fictitious buyout offer for Spencer, and to otherwise promote Spencer’s stock. The Commission alleges that the promotional campaign pumped up the price of Spencer’s stock, and Amyot benefited by dumping his own Spencer stock at artificially inflated prices.

The Commission’s complaint, filed in the U.S. District Court for the District of Massachusetts, alleges that beginning in November 2010, Spencer, a purported pharmaceutical company with addresses in Boston, Massachusetts, and Canada, disseminated false and misleading press releases claiming that it had received an unsolicited buyout offer from a Mideast company for $245 million when, in fact, the purported buyout offer was not real. The complaint further alleges that Arella and Morrice worked with Amyot to create and disseminate the fraudulent press releases. According to the complaint, while Spencer was issuing the press releases, the defendants were conducting a promotional campaign using Internet websites and newsletters to tout Spencer’s stock and the bogus buyout offer, and the false press releases and promotional campaign were successful in pumping up the price of Spencer’s stock. For example, after Spencer publically announced that the Mideast company proposed to pay $245 million for Spencer, the price of Spencer stock more than doubled in two days – opening at $0.25 per share on November 10, 2010 and closing at $0.60 per share on November 12 – and the daily trading volume for Spencer’s stock reached almost six million shares on November 11, compared to a daily average trading volume of less than 50,000 shares during the previous three months. During the time the buyout offer was being promoted, Amyot sold approximately 36 million Spencer shares for gross proceeds of approximately $5.8 million. Each of the defendants are charged by the Commission with violating various antifraud provisions of the federal securities laws. The complaint further charges Spencer, Amyot, and Arella with violating securities registration provisions of the securities laws. According to the complaint, Amyot and Arella were involved in a series of transfers involving 12 million Spencer shares that were done to evade the securities registration requirements and move the shares into an account controlled by Amyot.

The Commission also suspended trading in Spencer securities on December 17, 2012, 34-68447. Securities of Spencer were quoted on OTC Link operated by OTC Markets Group Inc.

The Commission alleges that Spencer, Amyot, Arella, and Morrice violated Section 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder; that IAB Media and Hilbroy violated Sections 17(a)(1) and (3) of the Securities Act and Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c); and that Arella, Morrice, IAB Media, and Hilbroy aided and abetted the violations by Spencer of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5. The Commission also alleges that Amyot is liable for Spencer’s violations of Section 10(b) and Rule 10b-5 as the company’s control person and that Spencer, Amyot, and Arella violated Sections 5(a) and 5(c) of the Securities Act. The Commission is seeking permanent injunctions, disgorgement plus prejudgment interest, and civil penalties against Spencer, Amyot, Arella, Morrice, IAB Media, and Hilbroy. It also seeks an order prohibiting Amyot, Arella, and Morrice from serving as an officer or director of a public company and from participating in the offering of a penny stock.

The Commission acknowledges the assistance of the Quebec Autorité des Marchés Financiers in this matter."

The complaint contains specific information about Hail First Pharma and Al-Durra/A-Dorra/Al-Dora etc. etc.:

"On November 16, 20 I 0 at 9:05 a.m., Market Wire carried a press release from Spencer that identified the purported buyer as Al-Dora Holdings, a Kuwaiti company: Spencer Pharmaceutical Inc. disclosed today that the Al-Dora Holdings is the buyout offering entity.1 According to information provided to the company, the Al-Dora Holdings is a Kuwaiti private investment company owned and
managed by some of the Gulfs richest families. The Al-Dora
Holdings is represented by its chairman, His Excellency Dr. Bandar
AI-Dhafiri and its CEO His Excellency Hussein Al-Awaid.
"We are happy to now be advanced enough to disclose the name of
the acquiring party," said Dr. Max Arella, President of Spencer
Pharmaceutical Inc. "Even though we are advancing with our
research and licensing we are putting forth all necessary efforts to see this transaction to a successful conclusion," further added Dr. Arella.
During the day, Amyot's Small-Cap Fund sold 172,120 shares of Spencer stock (18% of the day's trading volume) for gross proceeds of$83,048.......

On January 20, 2011, a public news outlet called RediNews carried a press release purportedly from Al-Dorra announcing that it was going to spin off a subsidiary called Hail First Pharma Inc. ("Hail First Pharma"): According to the company, Hail First Phanna Inc. is the result of several acquisitions and or joint-ventures with international pharmaceutical companies
including but not limited to Spencer Phannaceutical Inc., a public traded company listed on the US OTC Markets (PINK:SPPH).
Those statements were false and misleading because Hail First Pharma had not acquired or entered into a joint venture with Spencer. The price of Spencer stock closed that day at $0.21 per
share- up 62% from its closing price on the prior trading day........................

Amyot, Arella, and Morrice -and, by extension, the companies they controlled collectively (Spencer) or individually (lAB Media and Hilbroy controlled by Amyot)- knew or were reckless in not knowing that the purported buyout offer was not real.

79. According to several of its press releases, Spencer conducted due diligence about Al-Dora. However, Arella and Morrice never confirmed that Al-Dora was a legitimate company.
They never spoke with anyone at the Russian firm that first approached them about the buyout.
They supposedly sent someone to visit Al-Dora's offices in Kuwait, but the individual did not meet with any representatives of Al-Dora, and the office building he identified does not actually contain a business by that name.
80. Strategema Capital, the Swiss finn hired by Spencer to evaluate the buyout offer, did not speak with anyone at Al-Dora and found nothing in the public domain to confirm the existence of Al-Dora.
81. Spencer's November 16, 2010 press release identified Al-Dora Holdings as "a Kuwaiti private investment company owned and managed by some of the Gulfs richest families" and identified "His Excellency Dr. Bandar Al-Dhafiri" as its Chairman. Arella and Morrice never met or spoke with Al-Dhafiri, and they obtained no evidence that the name refers to a real person.
82. Spencer's November 16,2010 press release also identified "His Excellency Hussein Al-Awaid" as the CEO of Al-Dora Holdings. Al-Awaid is a real person, but he is simply a Kuwaiti-born Canadian citizen who is vice president of a Canadian immigration company. Al-Awaid has had other business dealings with Amyot, who has described him at times as being affiliated with Hilbroy.
83. The letter dated November 22,2010 in which Al-Dora supposedly offered to provide the $500,000 non-refundable deposit contains no return address, no letterhead, and no other contact information, and the signature at the bottom of the letter is illegible and does not contain any typed name.
84. The letter dated December 8, 201 0 and entitled "Conditions to Offer to Purchase Agreement" did not originate with Al-Dora. Rather, an outside attorney hired by Spencer provided Morrice with a blank template that Arella and/or Morrice filled in. The brief document does not contain the level of detail and evidence of due diligence to be expected in a multimillion dollar transaction, and there are multiple spelling and grammatical errors. The document provides only a post office box address for Al-Dora. The document was purportedly signed by Bandar Al-Dhafiri for Al-Dora, but as noted above, Arella and Morrice never met Al-Dhafiri, and they obtained no evidence that the name refers to a real person.
85. The $500,000 non-refundable deposit that Spencer received on December 21, 2010 did not come from Al-Dora. Rather, Amyot caused Hilbroy to advance the $500,000 to Spencer in exchange for 500,000 shares of Spencer stock.
86. Spencer received two letters from Sterling purporting to guarantee that Al-Dora had access to $500 million. However, Amyot drafted the letter for his contact Schlosser to sign, and the Sterling finn at the address shown on the letterhead is not an investment firm but rather a chartered accountant business that has no knowledge of the people or information mentioned in the letters.
87. When Al-Dora's supposed subsidiary, Hail First Pharma, issued press releases,the press releases were sometimes drafted by Amyot, and the company's contact information was
sometimes listed as Hilbroy.
88. Besides the circumstantial evidence set forth above, the purported acquisition of Spencer makes absolutely no business sense. On November 12, 2010, Spencer announced that the buyer was prepared to pay $245 million for the company. Yet just a week earlier, the company's interim financial statement indicated that it had assets of$111,532, liabilities of $303,855, and a shareholders' deficit of more than $17 million. The interim statement also indicated that Spencer had no revenue and a net loss of$188,660 in the third quarter of2010.
Further, an inquiry at the PTO would have revealed that the company's only supposed asset- the U.S. patent- had been denied by the PTO. It is inconceivable that a "Kuwaiti private investment company owned and managed by some of the Gulfs richest families" would have offered to pay $245 million for a fledgling company with no legitimate assets and no revenue. Also, the acquisition was styled as a "tender offer", but none of the necessary paperwork for a real tender offer was ever filed with the Commission, and public investors were never given instructions about how to tender their shares

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http://www.sec.gov/litigation/complaints/2012/comp22574.pdf