The Securities and Exchange Commission today charged two individuals with defrauding investors in penny stock companies that claimed to have valuable patents. One of those charged had been barred from the penny stock business based on his role in another securities scheme and neither he nor his companies had ever been issued any patents by the U.S. Patent and Trademark Office, the SEC alleged.
The SEC's complaint, filed in U.S. District Court for the Southern District of Florida, charged Rockey "Roc" G. Hatfield, of Safety Harbor, Florida, Steve E. Lovern, of Atlanta, Belize-based N1 Technologies Inc., and Wyoming-based NanoSave Technologies Inc. Hatfield is a repeat offender whose prior securities schemes resulted in a criminal conviction, injunctions, a contempt of court finding, and broker-dealer, investment adviser, and penny-stock bars. The SEC's complaint alleges Hatfield controlled the two companies but concealed his role in them by having his wife and Lovern named as corporate officers and directors.
The U.S. Attorney's Office for the Southern District of Florida filed related criminal charges against Hatfield, Lovern, and others, and the SEC announced a trading suspension in NanoSave Technologies (NNSV).
According to the SEC's complaint, the defendants hired unregistered brokers to cold call investors and pitch investments in "patent units," using scripts written by Hatfield, including one that falsely claimed N1 Technologies had patented a cure for staph infections. Investors were told that purchasing an $80,000 unit could yield as much as $1 million based on sales of similar patents, the SEC alleged. The SEC alleged that although investors were told that their money would help fund further research and development, the defendants used most of it for personal expenditures and to pay sales commissions of up to 40 percent.
The SEC's complaint charges N1 Technologies, NanoSave Technologies, Hatfield, and Lovern with violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC's complaint also charges Hatfield and Lovern with violating Section 20(a) of the Exchange Act and Lovern with aiding and abetting violations of Section 15(a) of the Exchange Act. The SEC is seeking return of the defendants' allegedly ill-gotten gains, with interest, a civil monetary penalty, a court injunction, and other relief.
The SEC's investigation, which is continuing, is being conducted by Jordan A. Cortez and Mark Dee in the Miami Regional Office. The case is being supervised by Eric. R. Busto and the SEC's litigation is being led by Alejandro Soto. The SEC appreciates the assistance of the U.S. Attorney's Office for the Southern District of Florida, the Federal Bureau of Investigation's Miami Field Office, and the Financial Industry Regulatory Authority.
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