SEC Obtains Final Judgment Against Former Boiler Room Operator
Yesterday, the SEC announced that is has obtained a final judgment against a former boiler room operator charged with participating in a fraudulent scheme to artificially inflate the per share price of penny stocks.
The SEC’s complaint alleged that in 2010, an owner of penny stocks, James Price, proposed to a stock promoter, Brian Kingsfield, that they engage others to help Price sell his shares. According to the complaint, Kingsfield recruited Wallace, who operated a boiler room through his wholly-owned company, JAW & Associates, Inc., to act as seller’s agent on behalf of Price and, subsequently, on behalf of another seller, William Alverson.
From September 2010 through January 2012, Wallace, directly and through the JAW cold callers whom he controlled, allegedly solicited buyers to purchase shares of four penny stock companies: Systems America, Inc., PEI Worldwide Holdings, Inc., Sycamore Ventures, Inc., and Healthient, Inc. According to the complaint, Wallace and the JAW cold callers whom he controlled fraudulently induced buyers to buy Price’s and Alverson’s shares by, among other things, making fantastic per share price predictions and not disclosing that Price and Alverson paid up to a 40% – 50% commission on each sale that JAW coordinated.
Wallace also allegedly manipulated the per share price of each security by buying shares through his personal brokerage account. All told, Wallace allegedly induced buyers to purchase a cumulative total of at least 8.3 million shares, generating at least $2.4 million in gross proceeds from which Price and Alverson allegedly paid commissions.
The final judgment, entered on December 15, 2017 by the Honorable Andrew J. Guilford of the U.S. District Court for the Central District of California, permanently enjoins Jason A. Wallace from violating Sections 5 and 17(a) of the Securities Act of 1933 and Sections 9(a)(2), 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, bars Wallace from participating in any offering of a penny stock, and orders Wallace to pay $512,048.80 in disgorgement and prejudgment interest and a civil penalty of $434,887.07.
Learn more HERE.