September 13, 2007
Sure Trace Security Settles SEC Charges
The SEC filed a settled civil action in the United States District Court for the District of Columbia against Sure Trace Security Corporation and Peter Leeuwerke, a former chief executive officer and consultant to Sure Trace, for their alleged violations of the antifraud and registration provisions of the federal securities laws, and against Michael Cimino, Sure Trace's vice-chairman and president, for his alleged violations of the registration provisions. Sure Trace is a development stage company that sells purported technology that allows identification images to be permanently imprinted on an object. The Commission's complaint alleges that on September 14, 2004, Sure Trace issued a press release claiming it had signed a contract for $6 million gross annual revenue, when, in fact, it had not secured the contract. Sure Trace issued two other press releases in 2004 that allegedly omitted material facts about Sure Trace's negotiations to acquire Sensor Media Corporation. Leeuwerke had a role in drafting each release.
The Commission's complaint also alleges that Sure Trace made several attempts to evade securities registration requirements. According to the complaint, from 2002 to 2003, Sure Trace attempted to use at least three Forms S-8 to register the issuance of stock, purportedly to give to its employees and consultants under the auspices of various employee stock option plans. Many of the shares Sure Trace registered on Forms S-8 and issued to "consultants" were never intended to compensate the so-called "consultants" for their services, but rather were designed from the outset to make a market in the company's stock. Sure Trace also violated the registration requirements in May 2006 when it spun off shares of its subsidiary, True Product ID. Cimino effected the spin-off.
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