Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Tuesday, August 12, 2008

SEC Charges Phoenix Attorney with Corporate Identity Theft

The SEC filed a civil complaint against David B. Stocker, a Phoenix, Arizona attorney, and his wholly-owned corporation, Carrera Capital, Inc. The Commission's complaint alleges that, beginning in early 2006, Stocker allegedly found several companies whose stock had once traded in the public markets, but that had become defunct corporations and were no longer operating. When he found such a company, he allegedly incorporated a new company under the same name in the same State and, using his authority to act for the new company, purported to act on behalf of the old company. Specifically, Stocker allegedly caused stock in the old companies to be exchanged for stock in the new companies under the false pretense that the old company was undergoing a reverse stock split. Stocker then allegedly caused the new companies to issue large blocks of stock to Carrera Capital, Inc., or to other persons, such that he or the other persons typically held 99% of the stock in the new companies. Through this scheme, Stocker was allegedly able to gain control of public shells without having to pay for them or otherwise deal with their former control persons. The Commission alleges that Stocker profited from the scheme by selling the shells for cash payments.

The SEC's complaint seeks permanent injunctions, orders to provide an accounting, disgorgement plus prejudgment interest, third tier civil penalties, and penny stock bars against each defendant.

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