Securities and Exchange CommissionSEC() filed a complaint with the U.S. District Court for Northern District of Texas in relation to five individuals. The complaint claims that the individuals involved were part of a fraudulent scheme involving millions of shares in a microcap called Global Resource Energy, Inc., based in Fort Worth. The defendants received approximately $1.7million from this scheme.
The SEC claims that two individuals, Thomas Collins and Patrick Thomas, gained control of a majority shareholding in GBEN without disclosing their actions. Then, they worked with Brian Kingsfield and Scott Levine to sell the shares fraudulently to the public. Collins and Thomas used bogus consulting agreements to transfer restricted GBEN share to a reputable third party. This made it look as if these shares were freely tradable. Kingsfield and their network of salespeople helped them convince investors to buy the shares. Collins also hired Levine, a broker, to help connect unwitting investors with secretly controlled sellers. Collins and Thomas also used a sham consultancy agreement to transfer additional restricted GBEN share to a Kouletas-owned entity. After selling the shares, Kouletas and Collins split the proceeds.
In its complaint, the SEC accuses all defendants of violating securities laws. This includes the anti-fraud provisions of both the Securities Act of 1933 and the Securities Exchange Act of 1933. Kingsfield, for acting as an unauthorized broker, is charged with violating Exchange Act. All defendants are being sought by the SEC for permanent injunctive measures, disgorgement and interest on ill-gotten profits, civil penalties, penny stock bars, etc. Collins and Thomas will also be barred from acting as directors or officers. These defendants have consented to the charges and relief in anticipation of court approval.
Each defendant has entered a guilty plea in parallel criminal proceedings. Collins was sentenced to a 41-month prison term, Thomas to an 18-month jail term, Kouletas, to a 43 month prison sentence, Kingsfield, to a 37-month imprisonment. Levine awaits sentencing.
In a different proceeding, Damon Durante has agreed to a stop-and-desist. Durante is found to have violated securities law by acting as a broker who was not registered. Durante agreed to pay a disgorgement and a civil fine, as well as a penny stock ban, an industry ban, and a civil penalty. In a parallel criminal proceeding, he pleaded guilty and received a six-month prison sentence.
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Derek Kleinmann, Ty Martinez and Sarah S. Mallett from the SEC Fort Worth Regional Office conducted the SEC investigation. Matthew J. Gulde is overseen by B. David Fraser and conducting the litigation.
SEC: What You Need to Know
Securities Exchange Commission, or SEC for short, is the regulatory agency of the United States which oversees and enforces securities laws. The primary goal of the SEC is to protect investors and maintain fair, efficient, and transparent markets. These goals are achieved by the SEC through regulation of the securities industry. This includes stock exchanges and broker-dealers as well as investment advisors and mutual funds. In addition, it requires companies to provide relevant financial information to public in order to promote transparency and to prevent fraud. The SEC also investigates and prosecutes violations to securities laws and imposes penalties and sanctions if necessary. The SEC is crucial in maintaining the integrity of the U.S. Financial Markets.
