Eight individuals have been charged after allegedly running a $2 million pump-and-dump scheme.
Jeffrey Martin, of Orlando, Fla., and Thomas Tedrow, of Winter Park, Fla., were charged with fraud on Tuesday in U.S. District Court for the Middle District of Florida in Orlando.
In its complaint, the SEC alleges that Martin and Tedrow concealed that Mainstream Entertainment was a shell company. The pair allegedly intended to merge Mainstream with a purported solar energy company, First Power & Light, to create a new corporation, Volt Inc. Volt and its predecessors had no business operations and nominal assets as of March 2011.
Between 2011 and 2014, Tedrow and Martin allegedly executed a scheme to sell millions of unrestricted shares of the companies in the open market while spreading false positive information about them.
The pair allegedly issued false press releases and false statements to broker-dealers and transfer agents, used a stock promoter to make cold calls with false materials, and made false SEC filings to artificially inflate the price of Mainstream stock.
Tedrow and Martin also allegedly engaged in matched trading designed to emulate legitimate investor interest, while selling millions of shares of Mainstream into the manipulated market.
Mainstream Entertainment is now known as Volt Solar Systems. On May 22, 2014, the SEC suspended trading in Volt’s securities, and on December 16, 2015, the SEC revoked the registration of Volt’s securities.
Tedrow’s two sons, Christian Tedrow and Tyler Tedrow, allegedly drafted some of the false documents about Mainstream and received millions of purportedly unrestricted shares that they sold in the open market, without registering the shares or having a valid exemption from registration.
This was not the SEC’s first run-in with Jeffrey Martin and Thomas Tedrow – according to a June 2001 SEC filing, the two settled accusations of insider trading and falsifying reports regarding Am-Pac International, a company they had once controlled, by paying approximately $58,000 in combined penalties. As part of the settlement, the pair neither admitted nor denied the allegations.