Jim, I am not sure what you mean that Gendarme needs to prove it. The SEC says that Gendarme was buying stock at a discount and quickly selling them. The SEC says those shares should of been restricted, but Gendarme with the help of their lawyer, convinced the issuing companies that a restrictive legend was not needed.
Yes, all bad things. But what the SEC did not say (read carefully) is that Gendarme was selling shares they did not own.
Now before the SEC files litigation, it obviously does substantial DD, and they would have uncovered an issue like selling shares they did not own.
The only legal issues for RCCH are:
1. Why did newton and his legal counsel approve of selling the shares without a restricted legend? If newton legal counsel approved of this transaction, then newton should sue them as this was illegal. But as rcch has not sued, per a review of relevant court websites, what does that tell you?
2. Why did newton and maybe his legal counsel approve of selling a minimum of 21% of the company to Gendarme, without requiring Gendarme to file a 13g or f, which one has to file if they hold over 5% of a publicly traded company. Particularly, since Gendarme was supposed to holding these securities long term.
It is not unreasonable to think that newton did not require Gendarme to file if he knew that the shares would be sold quickly and illegally. Why draw attention to an illegal act by requiring that Gendarme was going to be a major holder?
Lastly and not a legal issue, but you would think that if newton actually thought Gendarme were legit, he would of publicly spun the sale as "an investment in this great company by a major institutional investor who has confidence in management and the ability to be a leader......"
Now you know that newton never lets an opportunity to spout off about how great he and RCCH are. Just something to think about.
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