In the annals of penny stock crime, here's one tactic I have not seen before: Steal the company.
As described by the Securities and Exchange Commission in a suit filed this week, David B. Stocker, a Phoenix lawyer, came up with the ingenious idea of stealing companies that had no assets except for their S.E.C. registrations.
How do you steal a company?
First, pick a company that is defunct for all practical purposes but still has an S.E.C. registration. There is a market for such companies, since they can be used by a stock promoter to take a company public without all the bother of having to write a prospectus that the S.E.C. will read and comment on, and might not let go forward. Just merge your company into the shell, in return for lots of stock, and you have a tradable stock you can promote.
Unfortunately, such shells often have a lot of shares outstanding, owned by who-knows-who? If you pump them up, some stranger might be able to profit.
Mr. Stocker seems to have artfully avoided that problem.
Having found a company, the S.E.C. says, Mr. Stocker "incorporated a new company under the same name in the same state and, using his authority to act for the new company, purported to act on behalf of the old company."
He arranged for "stock in the old companies to be exchanged for stock in the new companies under the false pretense that the old company was undergoing a reverse stock split," the S.E.C. says. With that stock under his control, he could then sell the shell and keep the proceeds.
The S.E.C. says he did it several times.
I wrote a column last year about another tactic used by Mr. Stocker in a case that allowed stock promoters to dump worthless shares on foolish investors. Others had gone to prison, but he has not been charged.
The S.E.C. did file a civil suit against him last summer. That suit has been held up by the Justice Department, an indication that it is at least thinking of bringing criminal charges.
Mr. Stocker's lawyer, Don Christie, tells me that Mr. Stocker has voluntarily stopped practicing securities law, and that he tried to make restitution in the stolen company cases "after he realized there might be a problem."
Yeah, but the real question about Stocker should be did he do ONLY legal and good stuff for Lbwr. It is possible, (to be clear, I didn't say probable) ya know. Remember: innocent until proven guilty.....
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