The commission charged that David B. Stocker, an Arizona lawyer, had issued repeated legal opinion letters to justify the issuance of millions of shares of AVL Global, a company the commission said had essentially gone out of business but continued to issue shares and false news releases.
2 Lawyers Sued by S.E.C. in Penny Stock Fraud Case
The Securities and Exchange Commission filed a civil suit yesterday against two lawyers, one a former enforcement official for the commission, charging that they had played important roles in a penny stock fraud that cost investors at least $160,000 in 2005.
It appears to be the first time the commission has sought damages from lawyers who performed legal work in such cases but did not sell stock.
In addition to injunctions and financial penalties, the commission is asking that the two lawyers be barred from working on penny stock promotions in the future.
"This deal could not have happened but for the lawyers facilitating the sham transactions," said Marc J. Fagel, the associate regional director of the commission's San Francisco office.
The commission charged that David B. Stocker, an Arizona lawyer, had issued repeated legal opinion letters to justify the issuance of millions of shares of AVL Global, a company the commission said had essentially gone out of business but continued to issue shares and false news releases.
It said that Phillip W. Offill Jr., a Texas lawyer who formerly worked as an enforcement official in the commission's Fort Worth office, had set up a sham company at Mr. Stocker's request as part of the plan. Mr. Stocker was said to have received legal fees of $32,000; Mr. Offill's compensation was not stated in the suit, which was filed in federal court in Michigan.
AVL was thus able to issue millions of shares of stock, most of which went to Peter W. Fisher, who controlled most of the company's stock. Mr. Fisher was then able to sell it into the market. The commission also sought an injunction against and penalties from Mr. Fisher and his son, N. Tyler Fisher, who had been AVL's president.
"The public markets rely on the integrity of attorneys and other gatekeepers," said Linda Chatman Thomsen, the commission's director of enforcement. "This case shows that the commission will pursue not only those who perpetrate penny stock fraud but also those who facilitate such schemes."
The younger Fisher settled the case, agreeing to pay a $25,000 civil penalty, and consented to an order barring him from serving as an officer or director of a public company, or participating in a penny stock offering, for five years.
Neither Mr. Offill nor Mr. Stocker's lawyer returned telephone calls seeking comment.
Under normal circumstances, companies that issue stock to the public must register it with the commission and disclose information about the company. Otherwise, the shares cannot be traded in public markets. But there are exceptions, and Mr. Stocker's letters claimed AVL's offerings qualified for one such exemption.
That enabled company insiders to "unload their stock without accurately informing investors of the company's true financial state," said Helane L. Morrison, the regional director of the commission's San Francisco office.
Mr. Stocker had been involved in other penny stock offerings that drew official attention, including one in which two promoters pleaded guilty to criminal charges and were sentenced to prison. In that case, the shares were sold through the use of spam e-mail messages promoting the stock, and his letters enabled the stock to be sold in the public market. He did not face any civil or criminal accusations in those cases.
"and that he tried to make restitution in the stolen company cases "after he realized there might be a problem.""
See, he's a nice guy and you're all pickin' on him.
Serious ot: Am I the only one getting hit with viruses trying to get at my system? Fortunately, my virus shield's doing it's job, but it's happened a few times....and ALL on IHUB.
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