Replies to post #47790 on Hartcourt Companies (fka HRCT)

[Investorman]

See next post. Corporations are "legal persons" and may be sued the same as natural individuals.

[Investorman]

Direct quotes from the complaint:

“SUMMARY

3. This case involves a fraudulent scheme by defendants to raise money for The Hartcourt Companies Inc. ("Hartcourt") by improperly issuing shares using a Form S-8 registration statement, and issuing false and misleading press releases. The Commission's Form S-8 registration statement permits a company to register securities with the Commission to be issued to employees, including consultants and advisers, as compensation if they provide "bona fide services" to the company, and the services "are not in connection with the offer or sale of securities in a capital-raising transaction." Hartcourt improperly issued shares using a Form S-8 registration statement to raise capital for its investments, and issued false and misleading press releases to inflate the price of its stock artificially while the Form S-8 shares were being sold. By this conduct, defendants Hartcourt and Phan avoided the disclosure requirements associated with registering securities under Section 5 of the Securities Act.

4. From September 1999 to November 1999, Hartcourt obtained over $800,000 by improperly using a Form S-8 registration statement to issue one million shares of Hartcourt stock to Yongzhi Yang's ("Yang") wife, purportedly to compensate her for services provided to Hartcourt.

5. In fact, Hartcourt's CEO, Alan Phan ("Phan"), with. Yang's assistance, used the majority of the shares issued under the Form S-8 registration statement to
raise capital for Hartcourt. Phan arranged the sale of the majority of the stock and caused the proceeds of the sales, with Yang's assistance, to be used for Hartcourt”

“.THE DEFENDANTS
8. The Hartcourt Companies, Inc. ("Hartcourt") is a Utah corporation headquartered in Long Beach, California. Shares of Hartcourt common stock are quoted on the OTC Bulletin Board.

9. Alan V. Phan ("Phan"), age 57, resides in Long Beach, California. Phan is the former Chairman, CEO and President of Hartcourt. Phan asserted his Fifth Amendment privilege against self-incrimination in response to questions about the Form S-8.

10. Yongzhi Yang ("Yang"), age 45, resides in Los Angeles, California. Yang, a former assistant professor of mathematics at Alabama State University, is currently in the computer consulting business.”

“27. Phan was directly involved in the sale of at least 800,000 of the S-8 Shares, which were sold to raise approximately $819,363 in capital for Hartcourt's
UAC and FTL transactions, among other things.”

[Investorman]

The court will not care whether or not you think it is illegal and unfair. Companies CAN be sued and are all the time. Phan acted in his capacity as an officer of the corporation and therefore the company can be held liable for his actions in that capacity. It is alleged that HRCT received the money from illegal activities and therefore HRCT can be ordered to disgorge the money if the court finds the allegations to be true. This is not my belief - it is a matter of law.