Joseph Meuse & Belmont Partners Barred, Enjoined and Fined
On January 10, 2014, the Securities and Exchange Commission (“SEC”) announced a pathetic $300,000 settlement against Belmont Partners LLC, an alleged “shell packaging” company and Joseph Meuse, its Chief Executive Officer. Belmont and Meuse were charged with facilitating a penny stock scheme involving a reverse merger.
According to the SEC, Virginia-based Belmont Partners LLC and its CEO Joseph Meuse are in the business of identifying and selling public shell companies for use in reverse mergers. Belmont’s marketing materials reflect it assisted more than 100 companies complete reverse mergers. Many of these reverse mergers involved China based penny stock issuers. Public shell companies for reverse merger transactions sell for as much as $450,000 each.
In an SEC enforcement action in late 2011, the SEC alleged that Meuse and his firm aided and abetted a New York-based company that fraudulently issued and sold unregistered shares of its common stock.
The SEC separately named Thomas Russo as a relief defendant in the case for the purposes of recovering ill-gotten gains in his possession as a result of his business partner’s participation in the scheme. According to the SEC’s complaint, Russo co-owned a stock promotion service called TheStockProphet.com.
In a final judgment ordered late yesterday by the Honorable Shira A. Scheindlin of the U.S. District Court for the Southern District of New York, Belmont Partners and Meuse agreed to pay $224,500. Meuse additionally has agreed to be barred from the penny stock business or from serving as an officer or director of a public company for at least five years. In a separate judgment entered last week, Russo agreed to pay $70,075.
“The SEC will continue to pursue and punish gatekeepers whose misconduct enables penny stock frauds to occur,” said Sanjay Wadhwa, senior associate director for enforcement in the SEC’s New York Regional Office. “Meuse and his firm not only sold the shell company but they fabricated the documents necessary to dupe the transfer agent into issuing shares that should never have been sold to the public. Russo received proceeds from the subsequent sale of the illicit stock.”
Belmont Partners and Meuse agreed to be permanently enjoined from violating Section 5 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. They neither admitted nor denied the SEC’s allegations.
The SEC previously entered into a bifurcated settlement with the Long Island-based issuer at the center of the scheme – Alternative Green Technologies (AGTI) – as well as its CEO Mitchell Segal, who agreed to be barred from the penny stock business or from serving as a corporate officer or director for at least five years. Financial penalties against Segal will be determined at a later date.
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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