SEC Charges ImageXpres and John and Kevin Zankowski With Securities Fraud
On September 25, 2013, the Securities and Exchange Commission (“SEC”) charged ImageXpres Corporation (ImageXpres), its CEO and president John Zankowski, and its CFO Kevin Zankowski with securities fraud.
ImageXpres is a microcap technology company located in Rochester, New York. It says it develops imaging systems solutions for commercial printing, consumer photo, health and business communications market segments, and more. It has not filed a financial report with OTCMarkets or issued a press release since 2011.
The SEC alleges that between the year ended December 2008 and mid-2011, the Zankowskis prepared a number of financial statements and press releases that contained false and misleading statements about the company’s operations and financial condition. Though the brothers reported surging revenues, in reality the company had so little money it could not produce the products it touted on a commercial scale, and failed to achieve the robust sales claimed. During this period, ImageXpres fraudulently reported revenue growth rates of more than 300 percent for some products, although there were almost no legitimate sales of those products.
The Zankowskis’ attempts to portray ImageXpres as “one of the world’s leaders in digital imaging products & services for over ten years” failed dismally. The stock is dormant, having traded on only three days this year. That is probably why the SEC did not feel it necessary to suspend trading in the issue.
The agency charged the defendants with violations of the antifraud provisions of the Securities Exchange Act of 1934. All three agreed to settle, accepting the entry of final judgments permanently enjoining them from future violations of the securities laws and barring John and Kevin Zankowski from acting as officers or directors of a public company and from participating in a penny stock offering.
The monetary penalties imposed were a slap on the wrist: $50,000 against John Zankowski and $25,000 against Kevin Zankowski.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit www.securitieslawyer101.com. This securities law blog post 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. Please note that the prior results discussed herein do not guarantee similar outcomes.
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