On Friday, the SEC charged three executives of Moon River Studios and Fonu2, Inc. (OTCPINK: FONU) with defrauding investors. 

The SEC alleges that Manu Kumaran, Jake Shapiro, and Roger Miguel schemed with to make an assortment of false and misleading statements in press releases and corporate filings. All three are also alleged to have backdated and falsified promissory notes as part of a scheme to issue (free trading) common stock in exchange for financing.

Miguel agreed to settle the charges against him without admitting or denying the allegations and agreed to be barred from participating in any penny stock offerings or serving as a public company officer or director for five years. Litigation continues against Kumaran and Shapiro.

Three other company directors who are not alleged to have participated in the fraud were separately charged with violating federal securities laws by failing to timely report their stock transactions in the company while serving on its board.  Former New York Democratic Governor David A. Paterson and music producer Charles A. Koppelman each agreed to pay $25,000 penalties to settle the charges against them without admitting or denying the findings.  An administrative proceeding was instituted against Matthew T. Mellon II, a businessman and former chairman of the New York Republican Party Finance Committee. 

See the SEC press release HERE.