SEC Files Fraud Charges Against Microcap Company and Its CEO
On Monday, the Securities and Exchange Commission charged a microcap company and its CEO with conducting a fraudulent scheme to mislead investors about the company’s success and prospects, hide its losses, inflate the value of its assets, and artificially prop up its stock price.
The SEC’s complaint, filed on December 4, 2017, alleges that Premier Holding Corp. (OTCQB: PRHL), a California-based company that describes itself as a green energy services provider, and its CEO, Randall Letcavage, orchestrated a series of purportedly important transactions with related parties designed to create the false appearance of an active company with a vibrant and promising business. According to the complaint, Premier and Letcavage used these transactions to mislead investors about the financial health of the company and to hide losses in Premier’s financial statements. Among other things, Premier and Letcavage assigned a high value to Premier’s most significant tangible asset, a promissory note, that they knew, recklessly disregarded, or should have known was incorrect. Premier and Letcavage allegedly misled investors about the value of this promissory note in filings with the SEC in 2013 and 2014.
The SEC also charged Joseph Greenblatt, a consultant who provided accounting services to Premier. According to the SEC’s complaint, Greenblatt assisted Premier in preparing certain of its fraudulent financial statements, which included a valuation of the promissory note that he knew, recklessly disregarded, or should have known was inadequately supported.
The SEC complaint seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest thereon, and civil monetary penalties as to all defendants, as well as a penny stock bar and an officer-and-director bar against Letcavage.
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