SEC CHARGES PENNY STOCK COMPANY WITH FRAUD IN ALLEGED SOLAR ENERGY SCAM

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

Securities and Exchange Commission v. MSGI Technology Solutions, Inc., and J. Jeremy Barbera, Civil Action No. 14-CV-5820 (S.D.N.Y.)

The Securities and Exchange Commission announced fraud charges against a penny stock company and its CEO linked to a scam artist whom the agency separately charged earlier this month.

The SEC alleges that MSGI Technology Solutions and its CEO J. Jeremy Barbera defrauded investors by touting a joint venture to develop and manage solar energy farms across the country on land purportedly owned by an electricity provider operated by Christopher Plummer. Barbera and Plummer co-authored press releases falsely portraying MSGI as a successful renewable energy company on the brink of profitable solar energy projects. However, MSGI had no operations, customers, or revenue at the time, and Plummer's company did not actually possess any of the assets or financing needed to develop the purported solar energy farms.

The SEC previously charged Plummer and a different penny stock company and CEO that similarly issued false press releases depicting a thriving business that in reality was struggling financially.

Barbera and MSGI agreed to settle the SEC's charges.

According to the SEC's complaint filed in federal court in Manhattan, in addition to co-authoring misleading press release with Plummer, Barbera himself made other material misstatements about MSGI's operations. For example, he described MSGI in press releases and on its website as an operational security company with customers all over the world, despite the fact that MSGI had long lacked the financial means to manufacture any security products on a commercial scale. Barbera also falsely claimed in press releases that another sham entity operated by Plummer had purchased MSGI's sizable outstanding debt, and he falsely touted nonexistent solar energy projects with an entity unrelated to Plummer.

The SEC's complaint charges Barbera and MSGI with violating antifraud provisions of the federal securities laws. The defendants have consented to the entry of final judgments permanently enjoining them from future violations of the antifraud provisions. In addition, Barbera has agreed to pay a $100,000 penalty and be permanently barred from acting as an officer or director of a public company or from participating in a penny stock offering. Barbera and MSGI neither admitted nor denied the charges. The settlement is subject to court approval.

The SEC's investigation was conducted by Justin P. Smith and George N. Stepaniuk of the New York office and supervised by Sanjay Wadhwa. The SEC appreciates the assistance of the U.S. Attorney's Office for the District of Connecticut and the Federal Bureau of Investigation.

TWO INDICTED IN PENNY STOCK SECURITIES FRAUD INVOLVING COMPANY THEY CONTROLLED

FROM:  SECURITIES AND EXCHANGE COMMISSION 
Two Penny Stock Promoters Indicted for Securities Fraud Following the SEC's Investigation of ConnectAJet.Com, Inc.

On September 11, 2013, the United States Attorney for the Northern District of Texas obtained a Grand Jury indictment against Jason Wynn and Martin Cantu for their role in a conspiracy to defraud prospective investors in a penny stock company that they controlled, ConnectAJet.com, Inc. (“ConnectAJet”).  The indictment was unsealed on September 19.  According to ConnectAJet’s press releases, ConnectAJet was developing a first-of-its-kind online booking system for private jet charters.  The indictment alleges that – to artificially boost demand for ConnectAJet stock – Wynn and Cantu issued several false public statements and advertisements that misled potential investors about (1) the progress and status of the company’s real-time booking system, (2) ConnectAJet’s relationships with other companies in the private jet industry, and (3) ConnectAJet’s customer base.  Based on that conduct, the indictment charges Wynn and Cantu with Conspiracy to Commit Securities Fraud in violation of Sections 10(b) and 32 of the Securities Exchange Act of 1934 (the “Exchange Act”) and Aiding and Abetting Securities Fraud under those two provisions.

The allegations in the criminal indictment stem from the same misconduct underlying the Securities and Exchange Commission’s (the “Commission’s”) prior investigation of ConnectAJet and the Commission’s prior civil enforcement actions against Wynn and Cantu.  On March 13, 2008, the Commission sued Jason Wynn and others for their role in a series of illegal, unregistered stock offerings in several penny stock companies, including ConnectAJet.  SEC v. Reynolds, et al., Case No. 3:08-cv-00438-B (N.D. Tex.).  In its Complaint, the Commission alleged that Wynn repeatedly engaged in a “pump and dump” of ConnectAJet and other companies.  The Complaint alleged that for each company, Wynn and his fellow penny stock promoters (a) organized a reverse merger of the company into a public shell, (b) purchased large blocks of the company’s stock at pennies per share in a bogus unregistered private offering, (c) created initial trading volume for the stock by selling some shares to a tightly controlled group of friends and family members, (d) touted the stock through spam e-mail, sham internet sites, and millions of direct mail advertisements, and then (e) dumped their shares on the investing public without the protection of registration at prices grossly inflated by their promotional activity.  On October 13, 2011, the Court entered partial judgment against Jason Wynn based on his consent and ordered that Wynn be permanently enjoined from further violations of the antifraud and registration provisions of federal securities law and be permanently barred from participating in any offerings of penny stock.  On July 11, 2013, the Court further ordered that Wynn and his corporate proxies pay $8,778,887 in disgorgement and prejudgment interest and $1,300,000 in civil penalties.

On September 2009, the Commission separately sued Martin T. Cantu and others in SEC v. ConnectAJet.com, Inc. et al., Case No. 3:09-cv-01742-B (N.D. Tex.).  The Commission alleged that Cantu participated in the scheme to “pump and dump” ConnectAJet stock and issued several false press releases and advertisements to further the scheme.  On July 23, 2010, the Commission obtained a judgment against Cantu that (a) enjoined him from further violations of the antifraud and registration provisions of federal securities law, (b) permanently barred him from serving as an officer and director of a public company, (c) permanently barred him from participating in a penny stock offering, (d) required him to pay $632,327 in disgorgement and prejudgment interest, and (e) required him to pay a civil penalty of $260,000.