The Securities and Exchange Commission (SEC) has brought allegations of stockbroker fraud against a Las Vegas-based food company and its CEO for issuing misleading statements regarding the company and charging consultants for the illegal sale of company shares.
The SEC complaint claims that Prime Star Group Inc. and CEO Roger Mohlman issued false and misleading press releases that touted lucrative agreements for the company’s food and beverage products. One agreement that was flaunted Prime Star and turned out to be false claimed that it had signed a $16 million distribution agreement with another beverage. The company also filed reports with the SEC that either understated its net losses or overstated its cash balance.
Furthermore, the SEC alleges that Prime Star and Mohlman used these exaggerations of the company’s operations to pump up its stock. Due in part to questions that arose regarding the adecuacy and accuracy of the information it was releasing about itself, the SEC suspended trading in Prime Star in June 2011.
“Prime Star and Mohlman used backdated consulting agreements and forged attorney opinion letters as a means to issue millions of shares to the consultants who then dumped them on unsuspecting investors,” said Eric I. Bustillo, the director of the SEC’s Miami Regional Office. “The SEC will persist in its efforts to stamp out microcap fraud schemes.”
The SEC has filed more than 50 enforcement actions for misconduct related to penny stocks, and issued more than 65 orders suspending the trading of suspicious microcap issuers.
If you have fallen victim to the manipulative tactics of a stock broker who is acting illegally, call Sokolove Law today to learn more about pursuing a stockbroker fraud lawsuit.