U.S. District Court enters final judgments against two defendants in fraudulent stock scheme
On February 16, 20,23, the U.S. District Court for the District of Massachusetts handed down final judgments, by consent, against Graham R. Taylor and William T. Kaitz. Both are Maryland residents. The Securities and Exchange Commission charged Taylor, Kaitz and seven other defendants for their involvement with fraudulent schemes which generated hundreds of thousands of dollars in illegal stock sales. This caused significant harm to investors around the world.
In its complaint, the SEC alleges that Frederick Sharp (a Canadian resident) orchestrated a complicated scheme between 2011-2019. Sharp and his associates helped conceal the ownership and control of large quantities of microcap stocks traded on U.S. Securities Markets. Then, they secretly dumped the stocks on these markets in violation with federal securities laws. Sharp’s alleged service included establishing offshore shell companies in order to conceal stock ownership. It also included arranging money transfers, stock transfers, and encrypted accounting systems.
Taylor was a part of a group consisting of three defendants, who acted as control persons. Together, the three defendants sold significant quantities of stock while hiding from the public their control positions. Taylor is accused of coordinating fraudulent stock sales, and receiving a large portion of the proceeds. Kaitz, on other hand, was a promoter who endorsed the stocks the control group intended to sell.
Taylor and Kaitz consented to the final judgments without admitting or denigrating the allegations. Taylor is permanently prohibited from violating securities laws and regulations relating to anti-fraud. He was ordered to pay $3,432,412, interest on the prejudgment judgment of $1,285,272, as well as a civil penalty amounting to $207,183. Kaitz was permanently barred from violating securities laws and exchange act antifraud provisions by the Kaitz judgment. He must pay $812,854, $279,014 in prejudgment interests, and a $215,000 civil penalty. In both judgments, Taylor and Kaitz are subject to penny stock bars.
Sharp was ordered by the court to pay more than $50 million in damages.
The remaining defendants are being handled in this ongoing litigation by a team from the Boston Regional Office, and Enforcement Division’s Retail Strategy Task Force.
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SEC: What You Need to Know
Securities and Exchange Commission is an American regulatory agency that supervises and enforces federal security laws. Its main mission is to protect and promote investors, ensure fair and efficient markets and facilitate capital formation. This is achieved by the SEC regulating securities firms, such as stock exchanges and broker-dealers. It also regulates investment advisors and mutual funds. In order to prevent fraud and ensure transparency, the SEC requires that all companies provide relevant financial data to the public. The SEC can investigate possible securities law violations, take enforcement actions against violators and impose sanctions or penalties when necessary. SEC’s role is critical in protecting and maintaining the integrity the U.S. Financial Markets.
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