RNKE - Roanoke Technology Corp. (fka rnke)

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SEC Files Fraud Charges Against Roanoke Technology Corp. and its President for Sham S-8 Scheme
http://www.sec.gov/litigation/litreleases/lr19511.htm

U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
Litigation Release No. 19511 / December 22, 2005

Securities And Exchange Commission v. Roanoke Technology Corp. et al., Case No. 6:05-CV-1880-ORL-3-KRS (M.D. Fla.)
SEC Files Fraud Charges Against Roanoke Technology Corp. and its President for Sham S-8 Scheme

The Securities and Exchange Commission (SEC) announced that on December 21, 2005, it filed a complaint in federal district court in Orlando, Florida against Roanoke Technology Corp. (Roanoke), based in Rocky Mount, North Carolina, David L. Smith, Jr., Roanoke's chairman, chief executive officer and president and a resident of Roanoke Rapids, North Carolina, Thomas L. Bojadzijev of Orlando, Florida, and Barrett R. Clark of San Diego, California. The complaint alleges that the defendants participated in a scheme to illegally raise money for themselves by using Form S-8 registration statements. The complaint also names Sussex Avenue Partners LLC (Sussex) of Carlsbad, California as a relief defendant.

According to the complaint, from 2003 through October 2004, Smith had Roanoke issue over one billion shares, pursuant to several Form S-8 registration statements, to Bojadzijev and Clark, purportedly to compensate them for services provided to Roanoke. The complaint alleges that Bojadzijev and Clark raised over $7 million in liquidating these shares and funneled over $4 million to Smith, who used the funds for his own personal spending. Form S-8 registration statements permit the issuance of stock to consultants in certain circumstances to compensate them for legitimate services rendered. S-8 stock, however, cannot be used by the issuer, such as Roanoke, to raise capital for its control persons. The complaint also alleges that Smith caused Roanoke to issue a series of false and misleading press releases while Bojadzijev was selling stock into the market.

The SEC's complaint alleges that the defendants violated the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933 (Securities Act) and the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. The SEC's complaint further alleges that Roanoke violated the reporting provisions of Section 13(a) of the Exchange Act and Rule 12b-20 thereunder, and that Smith aided and abetted Roanoke's violations of Section 13(a) of the Exchange Act and Rule 12b-20 thereunder, and violated the certification provisions of Section 13(a) of the Exchange Act and Rule 13a-14 thereunder. The SEC's complaint also alleges that Smith, Bojadzijev, and Clark violated the reporting provisions of Sections 13(d) and 16(a) of the Exchange Act and Rules 13d-1, 13d-2, and 16a-3 thereunder.

The SEC is seeking permanent injunctions, civil penalties, and disgorgement against all defendants, a penny stock bar against Smith, Bojadzijev, and Clark, and an order barring Smith from serving as an officer or director of a public company.

SEC Complaint in this matter

http://www.sec.gov/litigation/litreleases/lr19511.htm