Thursday, October 8, 2009
On September 29, 2009, the SEC filed a civil injunctive action against Irwin Boock, Stanton B. J. DeFreitas, and Jason C. Wong, all of Ontario, Canada, and two Houston-based attorneys, Roger L. Shoss and Nicolette D. Loisel, charging them with having violated the antifraud and registration provisions of the federal securities laws by effecting dozens of corporate hijackings and making unregistered offerings and sales of shares. The complaint also names as relief defendants Boock's wife, Birte Boock, and a company of which she allegedly was the sole officer and director during the relevant period, 1621566 Ontario, Inc.
The Commission's complaint alleges that the hijackings were effected by identifying inactive or defunct publicly-traded corporations which were no longer operating and either illicitly revivifying the corporations by falsely representing that the defendants were duly authorized officers, directors, or agents of the corporations or by incorporating new corporations using the names of the void corporation. Once an inactive corporation was revivified or a new corporation formed, the complaint alleges that the defendants immediately effected a name change in the corporation and requested from third parties responsible for assigning unique identifiers to each class of securities issued by a publicly-traded corporation a new identifying number known as a CUSIP number and ticker symbol. According to the complaint, these identifiers were obtained by falsely representing that the companies seeking new CUSIPs and ticker symbols were the same companies to which CUSIP numbers and ticker symbols had previously been issued and that the name changes triggering the need for new identifiers were duly authorized corporate actions.
The complaint alleges that Boock recruited Shoss and Loisel in late 2003 to handle the paperwork required to effect hijackings, including submitting false documentation to Secretaries of State, the Standard & Poor's CUSIP Service Bureau, transfer agents, and Nasdaq Corporate Data Operations which, during the relevant period, processed requests for ticker symbols. The complaint further alleges that from November 2003 through March 2006, Boock, Shoss, and Loisel effected at least 22 corporate hijackings. From November 2003 through June 2007, Boock, Wong, and DeFreitas allegedly effected at least another 21 corporate hijackings.
With respect to at least 19 of those corporations hijacked with Shoss and Loisel's involvement, the complaint alleges that Shoss and Loisel were tasked to provide 28 opinion letters falsely representing that offerings of approximately 223 million shares were exempt from the registration requirements of the federal securities laws. The complaint alleges that Boock dispensed with the need for obtaining legal opinion letters concerning the issuance of shares by the 21 hijacking corporations involving Wong and DeFreitas by incorporating his own transfer agency, Select American Transfer Company, which Wong and DeFreitas operated. With respect to these 21 companies, the complaint further alleges that the three men effected the unregistered offerings of up to seven billion shares.
The complaint also alleges that DeFreitas effected unregistered sales in the securities of at least 30 of the hijacked or hijacking entities, generating at least $2.2 million in illicit proceeds. Boock allegedly effected unregistered sales of securities in at least five of the hijacked or hijacking entities, generating at least $267,625 in illicit proceeds. Wong allegedly effected unregistered sales of securities in at least 11 of the hijacked or hijacking entities.
The complaint alleges that each of the defendant received illicit proceeds in the form of remuneration for services, proceeds from the sale of the shell companies to buyers, and/or from the sale of shares in purported private placements or into the secondary market.
Based on the foregoing, the Commission's complaint alleges that the five defendants violated Sections 5(a) and (c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint further alleges that Boock violated a penny stock bar instituted against him in 2002 in a settled administrative proceeding (see In the Matter of Birte Boock and Irwin Boock, Admin. Proc. File No. 3-10960 (Ex. Act Rel. No. 46952)), thereby violating Exchange Act Section 15(b)(6)(B)(i). With respect to each of the five defendants, the Commission is seeking a permanent injunction, a judicial penny stock bar, disgorgement with prejudgment interest, and civil penalties. The Commission is also seeking officer and director bars against Boock and Wong.