SEC Charges Penny Stock Company and CEO with Fraud and Issuing a False Press Release
On September 15, 2015, the Securities and Exchange Commission (SEC) charged a microcap issuer, The Mobile Star Corporation, and its CEO George Ivakhnik, with defrauding investors by issuing false press releases about the company’s business and prospects.
The SEC claims that shortly after Ivakhnik became CEO of the company in the spring of 2012, he began concocting and issuing press releases that had no factual basis. These press releases portrayed a company with considerable financial acumen and resources actively engaged in a wide variety of business ventures including: a ski resort, the manufacture of karaoke booths, the funding of an “event center” in Long Beach, California, and an agreement with a “major higher education institution” to provide financial consulting expertise” and to help “restructure and secure financing.”
On September 17, 2012, the SEC suspended trading in the securities of Mobile Star after the dissemination of the press releases. The SEC’s complaint, filed in federal court in Manhattan on September 15, 2015, alleges that Ivakhnik participated in drafting the false press releases and approved their public dissemination, knowing that the press releases contained false statements.
The SEC’s complaint charges Mobile Star and Ivakhnik with violations of the antifraud provisions of the federal securities laws. Ivakhnik is also charged with control person liability under Section 20(a) of the Securities Exchange Act of 1934 and with aiding and abetting Mobile Star’s violations. The SEC’s complaint seeks permanent injunctions, return of any ill-gotten gains with prejudgment interest, and civil money penalties. The SEC also seeks to bar Ivakhnik from serving as an officer or director of a public company or participating in a penny stock offering.
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.
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