David Fuselier Charged for Fraudulent Scheme
On June 6, 2017, the Securities and Exchange Commission (“SEC”) charged David Fuselier, a chief executive officer, with perpetrating a fraudulent scheme to create the false appearance of improvement in the financial statements of two publicly traded companies by removing significant liabilities.
The SEC’s complaint, filed in federal court in New York, N.Y. on June 6, 2017, alleges that beginning in 2012, David Fuselier, then-chairman, chief executive officer, and principal financial and accounting officer of Integrated Freight Corporation and New Leaf Brands, Inc., arranged for both companies purportedly to sell non-performing subsidiaries each with liabilities greater than assets. According to the complaint, David Fuselier convinced a long-time friend and business associate, Roy W. Erwin, to be in charge of the purchaser, a new company formed and controlled by David Fuselier that had no assets. David Fuselier hid the true nature of the transactions from the companies’ auditors and, from July 2012 to April 2015, reviewed, approved, and signed SEC filings containing false and misleading information about the related-party nature of the sales and the issuers’ financial condition. As a result, Integrated Freight and New Leaf filed with the SEC materially false and misleading reports.The SEC’s complaint charges:
- Fuselier and Integrated Freight with violating Sections 17(a)(1) and (3) of the Securities Act of 1934 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder;
- Fuselier with violating Section 17(a)(2) of the Securities Act and Exchange Act Rules 13a-14, 13b2-1 and 13b2-2 and with aiding and abetting New Leaf’s and Integrated Freight’s violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20, 13a-1 13a-11 and 13a-13 thereunder;
- Integrated Freight with violating Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-11 thereunder; and
- Erwin with aiding and abetting Fuselier’s violations of Sections 17(a)(1), (2) and (3) of the Securities Act and Section 10(b) and Rule 10b-5 thereunder.
Erwin has agreed to settle the SEC’s charges by accepting a three-year officer and director bar and a penny stock bar, and by paying a $25,000 penalty. The settlement is subject to court approval.
The SEC also issued an order temporarily suspending trading in Integrated Freight’s common stock and instituted administrative proceedings pursuant to Section 12(j) of the Exchange Act to determine whether it is necessary and appropriate for the protection of investors to suspend or revoke Integrated Freight’s SEC-registered securities.
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, or [email protected]. 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 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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Brenda Hamilton, Securities Attorney
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