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Replies to post #13874 on Max Sound Corporation (MAXD)
04/14/18 10:42 PM
04/14/18 10:50 PM
04/15/18 12:34 PM
MAXD SEC file about HKO, Hong Kong Opportunities LLC link.
· per the Certificate of Designation, Preference and Rights of Series “A” Preferred Stock of Max Sound Corp., the holder of the share of Series “A” Preferred Stock shall have voting rights and powers equal to the numbers of votes more than one-third of all votes entitled to be cast as of such Record Date by all holders of capital stock of the Corporation so as to ensure that the votes entitle to be cast by the holder of the share of Series “A” Preferred Stock shall be equal to at least thirty-three percent (33.4%) of all votes entitled to be cast. Therefore, Hong Kong Opportunities LLC,has voting control and holds at least 33.4% of the voting power of the Corporation.
SEC Charges CEO in Penny Stock Fraud Scheme
Litigation Release No. 24111 / April 13, 2018
Securities and Exchange Commission v. Andrew J. Kandelapas, Civil Action No. 18-cv-02637 (N.D. Ill. April 12, 2018)
The Securities and Exchange Commission charged the CEO of a Chicago-area penny stock company with making false and misleading statements in the company's SEC filings and press releases and with manipulating the company's stock.
The SEC's complaint against Andrew J. Kandalepas, the CEO of Wellness Center USA, Inc. (Wellness), filed in the U.S. District Court for the Northern District of Illinois, alleges that Kandalepas took $450,000 in unauthorized withdrawals from the company and then concealed his actions by causing Wellness to characterize his withdrawals as salary, prepayments, or loans in false and misleading Forms 10-K and 10-Q. The complaint further alleges that Kandalepas caused the company to issue false and misleading press releases touting non-existent sales of medical devices by a Wellness subsidiary.
According to the complaint, Kandalepas also manipulated the market for Wellness stock through secret trading in a friend's brokerage account and pocketed more than $130,000 from his secret trading. According to the complaint, Kandalepas coordinated trading with Matthew T. Mushlin, who Kandalepas hired as an unregistered broker to solicit investments in Wellness through private placement agreements.
The SEC's complaint alleges that Kandalepas 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, and aided and abetted Wellness' violations of Section 17(a)(2) of the Securities Act and Mushlin's violations of Section 15(a) of the Exchange Act. The SEC is seeking a permanent injunction, disgorgement including prejudgment interest, a civil penalty, an officer-and-director bar, and a penny stock bar.
In separate settled administrative proceedings, the SEC made findings with respect to the involvement of Wellness, its auditor Li and Company, P.C. (Li & Co.), audit engagement partner Tony Li, and Mushlin in the fraudulent scheme. All Respondents settled without admitting or denying the SEC's findings. Wellness agreed to a cease-and desist order. Mushlin agreed to a cease-and-desist order, to pay disgorgement of $232,925 with $23,101 of prejudgment interest, and a $240,000 civil penalty, and bars and prohibitions from association. Li & Co. and Li agreed to a cease-and-desist order, to each pay $22,500 in disgorgement with $2,643 of prejudgment interest, and to pay, jointly and severally, a $45,000 civil penalty, and to be permanently suspended from appearing or practicing before the Commission as an accountant, which includes not participating in the financial reporting or audits of public companies.
The SEC's investigation was conducted by Michelle Muñoz Durk, Kevin A. Wisniewski, and Craig L. McShane. The case is being supervised by Jeffrey A. Shank, and Doressia L. Hutton will lead the litigation.
Related Documents:
Order - Wellness Center USA, Inc.
Order - Li and Company, PC and Tony Zhicong Li, CPA
Order - Matthew T. Mushlin
