U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23658 / September 28, 2016
Securities and Exchange Commission v. Craig V. Sizer, and Miguel Mesa, Civil Action No. 1:16-CV-24106-JAL (S.D. Fla.)
SEC Charges CEO and Boiler Room Operator with Fraud
On September 26, 2016 the Securities and Exchange Commission charged a former microcap company CEO and a boiler room operator with defrauding seniors and others who were pressured to invest in a pair of penny stock companies and promised lucrative profits.
The SEC alleges that Craig V. Sizer founded Sanomedics Inc. and Fun Cool Free Inc., which were purportedly in the business of selling non-contact infrared thermometers and software applications respectively, and he hired Miguel "Michael" Mesa to help him attract and defraud investors in both companies. Sizer allegedly provided Mesa with a list of pitch points for use by boiler-room agents hired by Mesa to sell shares of the stocks based on misrepresentations that investor funds would be used for research and development and no sales commissions would be paid out of investor funds. According to the SEC's complaint, Sizer and Mesa misappropriated approximately 90 percent of the funds raised from investors, enriching themselves and paying sales commissions to the boiler-room agents. Several hundred investors nationwide were allegedly defrauded out of a total of approximately $20 million.
In a parallel action on September 26, 2016, the U.S. Attorney's Office for the Southern District of Florida announced criminal charges.
Sizer and Mesa have agreed to partial settlements of the SEC's charges without admitting or denying the allegations. They both agreed to be barred from future penny stock offerings, and Sizer agreed to be barred from serving as an officer or director of a public company. Financial sanctions will be decided by the court at a later date. The SEC's complaint alleges that Sizer and Mesa violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. Mesa also allegedly violated Section 15(a) of the Exchange Act, and Sizer allegedly aided and abetted Mesa's violations.
The SEC's continuing investigation is being conducted by Gary M. Miller and Eric E. Morales of the Enforcement Division's Microcap Fraud Task Force in the Miami office, and the case has been supervised by Elisha L. Frank and Jason R. Berkowitz of the Microcap Fraud Task Force. The SEC's litigation is being led by Alejandro O. Soto. The SEC appreciates the assistance of the Federal Bureau of Investigation, the U.S. Attorney's Office for the Southern District of Florida, and the Financial Industry Regulatory Authority.