Thursday, September 24, 2009
The SEC announced today that on September 18, 2009, it sued several individuals and entities, including ConnectAJet.com, Inc., its president and chief executive officer, Martin Cantu, Cantu's father Martin M. Cantu, registered representative Stephen Fayette, and stock promoter Timothy Page. The SEC alleged that the defendants implemented a scheme to funnel ConnectAJet.com, Inc. shares into the public market at great profit to themselves when no registration statement was filed or in effect.
According to the complaint, ConnectAJet.com, Inc., of Austin, Texas, issued 30 million shares of stock in an illegal, unregistered offering to certain penny stock promoters, including Testre LP and Verona Funds LLC, companies owned and controlled by Page, a resident of Malibu, California. To pump up demand for the stock, Cantu and ConnectAJet.com, Inc. launched a nationwide advertising campaign, issued false press releases and published misleading web content. The complaint further alleges that the press releases falsely stated that ConnectAJet.com. Inc. had created a real-time, online booking system for private jet travel. Testre LP, Verona Funds LLC, and an entity owned by Martin M. Cantu, Firenze Funds, LLC, then allegedly sold their stock into the public market at grossly inflated prices for millions of dollars in profits. Fayette, of Sarasota, Florida, allegedly facilitated the scheme by liquidating ConnectAJet.com, Inc. shares on behalf of multiple clients.
The SEC alleges that by the above-mentioned conduct, the defendants violated the registration provisions of the Securities laws, Section 5 of the Securities Act of 1933. In addition, the SEC alleges that Cantu and ConnectAJet.com, Inc. committed securities fraud, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The SEC is seeking permanent injunctions, civil penalties, disgorgement of ill-gotten gains and penny stock bars. Additionally, the complaint seeks an officer and director bar against Cantu, and the return of "ill-gotten gains" from four relief defendants.