SEC Sues Imaging3 and CEO Dean Janes for Fraud

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On June 26, 2013, the Securities and Exchange Commission (“SEC”) filed an enforcement action charging Imaging3, Inc. (IMGGQ), and Dean Janes, its CEO, with securities fraud, accusing Janes of misleading shareholders about actions taken by the Food and Drug Administration (“FDA”) in connection with the company’s product. Imaging3, which stopped making required financial filings with the SEC in mid-2012, trades spottily on OTCMarkets’ Pink No Information tier and is in bankruptcy.

According to the SEC action, it sent Wells Notices to Janes and IMGGQ after its  investigation last November, warning them  the contemplated enforcement action.  The SEC action alleges that on November 1, 2010, Janes held a conference call with concerned investors after the FDA denied clearance for IMGGQ to market its proprietary scanner, which it claimed to provide three-dimensional images to be used in medical diagnosis.

The denial was IMGGQ’s third.  Even though the FDA had noted that some images submitted by IMGGQ in connection with its request were “scientifically invalid and useless,” and had added that the device had potential for overheating, Janes assured callers that there was “really and honestly  not one question about the technology or its consistency.”  He added that the reasons for the FDA’s denial were mostly “administrative,” even “ridiculous,” and had nothing to do with the scanners safety or image quality.  He complained further that the rejection “totally blindsided myself [sic] and management and we’re not gonna take this lying down.”

Janes did not publish the FDA letter itself.  According to the SEC action, he later admitted that he didn’t believe it was “always good to put out negative information, though it would have been more accurate.”

In January 2011, a shareholder obtained a copy of the letter and posted it on the Investor’s Hub IMGGQ message board. According to the SEC Action, Imaging3 did not release its own copy until February 28, 2013.

The SEC Action is seeking to enjoin Imaging3 and Janes from violating antifraud provisions of the securities laws, to require both to pay monetary penalties, and to bar Janes from serving as an officer or director of a public company.

For further information about SEC enforcement actions and securities fraud, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton Florida, (561) 416-8956, by email at info@securitieslawyer101.com or visit www.securitieslawyer101.com

This memorandum about SEC enforcement action and Securities Fraud is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. For more information concerning the rules and regulations affecting the use of Rule 144, Form 8K, FINRA Rule 6490, Rule 506 private placement offerings, Regulation A, Rule 504 offerings, SEC reporting requirements, SEC registration on Form S-1 and Form 10, Pink Sheet listing, OTCBB and OTCMarkets disclosure requirements, DTC Chills, Global Locks, reverse mergers, public shells, go public direct transactions and direct public offerings please contact Hamilton and Associates at (561) 416-8956 or by email at info@securitieslawyer101.com. Please note that the prior results discussed herein do not guarantee similar outcomes.

Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855
www.SecuritiesLawyer101.com

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