Korem3 was enjoined, on consent, from violating the antifraud provisions of the federal securities laws, Section 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in SEC v. Charbit, No. 1:10-cv-23604-CMA (S.D. Fla. Dec. 17, 2010). The court also imposed a penny stock bar. The underlying misconduct, as set forth in the complaint, Division Exhibit A, was as follows:4 From December 2009 through February 2010, Korem and Jean R. Charbit (Charbit), a stock promoter, engaged in a fraudulent kickback scheme involving ZNext Mining Corporation, Inc. (ZNXT) common stock, a penny stock. Korem drafted press releases for ZNXT and served as ZNXT’s transfer agent through his company, First Public Securities Transfer. Charbit paid an illegal kickback to a purported corrupt stock broker (in reality an undercover FBI agent) to induce him to purchase $300,000 of ZNXT stock for his clients’ discretionary accounts. The kickback consisted of $3,000 in cash and $100,000 of ZNXT restricted stock. Korem, as transfer agent, issued the stock certificate for the kickback. Korem and Charbit created this scheme to generate market interest in ZNXT, induce public purchases of ZNXT, and ultimately increase the stock trading price with the intent of selling their own shares at an artificially inflated price.
Additionally, arising out of the same course of conduct, Korem was convicted, on his plea of guilty, of conspiracy to commit securities fraud in violation of 18 U.S.C. § 371 in United States v. Korem, No. 1:10-cr-20732-UU (S.D. Fla. Feb. 10, 2011). Exs. 1, 2. He was sentenced to twenty-four months of imprisonment, followed by three years of supervised release. Special conditions of the supervised release include “The defendant shall obtain written approval from the Court before entering into any self-employment” and “Defendant may not engage in any transactions involving penny stock trading.” Ex. 2 at 2-4.
The factual summary “adopt[ed] . . . as [Korem’s] own statement” in his Plea Agreement in United States v. Korem, Exhibit 1, includes the following additional facts:5 Korem was ZNXT’s transfer agent and a shareholder, owning or controlling over a million shares of ZNXT common stock. The conspiracy was undertaken to manipulate the publicly quoted price of ZNXT stock from four cents to fifty cents per share. Korem, Charbit, and others made or planned to make timed press releases to give the investing public the false and misleading impression that the broker’s buying activity was induced by positive news about ZNXT, rather than the undisclosed kickback. While the conspiracy was halted by law enforcement before it resulted in actual losses to victims, the offense was undertaken with the specific intent of defrauding investors out of more than $300,000 entrusted to a broker in discretionary trading accounts. Ex. 1 at 9-10.
Korem recognizes the wrongful nature of his conduct and is remorseful. Korem’s opposition at 3-5. He intends not to violate the securities laws or to work in the securities industry in the future. Id.
...
V. ORDER
IT IS ORDERED that, pursuant to Section 17A(c)(4)(C) of the Securities Exchange Act of 1934, 15 U.S.C. § 78q-1(c)(4)(C), TZEMACH DAVID NETZER KOREM IS BARRED from association with any transfer agent.
By: carmelbeach 14 Aug 2011, 01:31 AM EDT Rating: Rate this post: Msg. 51295 of 51295 (Reply to 51284 by carmelbeach) Jump to msg. #
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