U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23227 / April 1, 2015
Securities and Exchange Commission v. David Craven et al., Civil Action No. 15-cv-1820 (S.D.N.Y.)
SEC Obtains a Preliminary Injunction Order, Including Asset Freeze, Repatriation Order and Findings of Fact and Conclusions of Law, Against Father and Son Behind Pump and Dump Scheme
The U.S. Securities and Exchange Commission announced that on March 26, 2015, a federal court issued a Preliminary Injunction Order that, among other things, imposed an asset freeze, repatriation order and made factual findings in a case against David Craven and Alexander J. Craven, a father and son team charged with manipulating the public market for shares of microcap issuer American Energy Development Corp. (AEDC) in violation of the securities laws. The Order will remain in effect until a final disposition of the case.
Judge Jesse M. Furman of the United States District Court for the Southern District of New York imposed the Preliminary Injunction Order based on the SEC's Complaint, Memorandum of Law in Support of Emergency Application, and supporting evidence submitted by the SEC.
The Complaint and Emergency Application, filed March 11, 2015, allege that by the middle of 2011, David Craven and Alexander Craven, British citizens residing in Switzerland and England, respectively, gained control of over 87% of the shares of AEDC through nominee companies under their control. Between October 2011 and February 2012, the Cravens inflated AEDC's share price through deceptive "wash trading" and "matched trading," and then secretly funded a $1.6 million promotional campaign for AEDC stock that featured a 16-page mailer sent to 1.2 million U.S. residents in April and May 2012. The Cravens' deceptive conduct succeeded in driving up the price and volume in AEDC stock, which allowed the Cravens to dump over $4 million worth of artificially inflated AEDC stock on unsuspecting investors through numerous overseas trading accounts.
The Cravens failed to offer any evidence or argument opposing the Preliminary Injunction Order. As a result, and based on the evidence submitted by the SEC, the Court issued detailed Finding of Fact and Conclusions of Law, and concluded that the SEC had established a likelihood of success on the merits warranting entry of the Preliminary Injunction Order. The Order:
(a) enjoins the Defendants, pending a final disposition, from violating Sections 17(a)(1), (2) and (3) of the Securities Act of 1933 and Sections 9(a)(1) and (2) and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder;
(b) continues the asset freeze in the Court's Temporary Restraining Order dated March 12, 2015;
(c) orders David Craven, Alexander Craven and Anna Craven to submit sworn accountings of their assets within 30 days; and
(d) orders David Craven and Alexander Craven to repatriate and deposit into a Court account all funds outside the United States that were obtained directly or indirectly from the conduct alleged in the Complaint or that constitute proceeds of any transaction in AEDC stock.
For further information, please see Litigation Release 23219 (March 12, 2015).