U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23696 / November 30, 2016
Securities and Exchange Commission v. Harrison Katzen, No. 16-cv-06606 (E.D.N.Y.)
SEC Charges Former Employee of Florida-Based Transfer Agent for Role in Offering Fraud
The Securities and Exchange Commission today charged a former employee of a Florida-based transfer agent for his participation in fraudulent schemes to offer sham securities to the investing public through a web of phony websites, internet advertisements, and an aggressive cold calling campaign - all of which, operating under the guise of seemingly legitimate investment firms, promised investors low risk and high rates of return.
The transfer agent, International Stock Transfer (IST), and its owner Cecil Franklin Speight, as well as two Florida-based attorneys James Schmidt II and Jonathan Flom, were previously charged by the SEC for their roles in these fraudulent schemes.
According to the SEC's complaint, filed in federal court in Brooklyn, N.Y., Harrison Katzen, of Lantana, Florida, while employed by IST and at Speight's direction, prepared offering materials used by others to solicit potential investors that touted the purported issuers of the securities being offered and the safety and benefits of investing in their securities. These offering materials contained numerous materially false and misleading statements. For example, the offering materials represented that the offering proceeds would be used by the issuers of the securities for business purposes, when in fact most of the investor money was distributed among scheme participants, including Katzen, and spent on funding the ongoing schemes.
The SEC alleges that the two fraudulent schemes that Katzen participated in defrauded approximately 60 investors located in the United States and abroad of approximately $3.2 million.
The SEC's complaint charges Katzen with violating the antifraud provisions of the securities laws, including Section 17(a) of the Securities Act of 1933 as well as Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.
The SEC's investigation was conducted by Brenda Wai Ming Chang, John Lehmann, Elzbieta Wraga, Adam S. Grace, and supervised by Lara S. Mehraban in the SEC's New York office. The SEC's litigation will be handled by Alexander Vasilescu, Ms. Chang, and Mr. Lehmann.