Tuesday, April 7, 2009
The SEC announced today that Beverage Creations, Inc., a Minneapolis, Minnesota company, and two of its former officers settled SEC charges that they illegally sold Beverage Creations stock through certain stock promoters and promoted that stock with a false press release. On April 6, 2009, the Honorable Judge Jane Boyle of the U.S. District Court in Dallas entered final judgments against Beverage Creations, Inc., former Chief Executive Officer Robert Wieden and former Chief Operating Officer Patrick Dado.
In March 2008, the SEC sued Beverage Creations, Inc. and several stock promoters alleging that they sold 30 million shares of stock to the public without a registration statement filed or in effect. According to the complaint, the stock promoters (1) purchased shares directly from Beverage Creations, Inc., (2) touted Beverage Creations, Inc. to investors through a nationwide marketing campaign, and (3) immediately dumped their shares into the public market at grossly inflated prices. The SEC also charged that Beverage Creations, Inc. participated in the touting by issuing a false press release denying any relationship between the company and one of the stock promoters. In December 2008, the SEC amended its complaint to add Beverage Creations, Inc. officers Robert Wieden and Patrick Dado. According to the amended complaint, Wieden and Dado were responsible for Beverage Creations, Inc.'s public offering, and they authored and approved the false press release. The SEC charged Beverage Creations, Inc., Wieden and Dado with violations of Section 5 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
Without admitting or denying the allegations, Beverage Creations, Inc., Wieden and Dado settled the action by consenting to entry of a court order that permanently bars them 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 thereunder. In addition, Wieden and Dado will pay civil penalties of $20,000 each. The SEC's action against the remaining defendants is ongoing.