A U.S. District Court for the Southern District of Florida on Thursday entered judgments against a group of penny-stock promoters on charges of attempting to scam investors out of money by fabricating the performance of energy companies that in fact actually didn't exist.
The judgments came in a civil action filed by the Securities And Exchange Commission in February against Miami-based stock-touting company Wall Street Capital Funding, LLC (WSCF) and its principals--owners Philip Cardwell and Roy Campbell, and their associate Aaron Hume.
The judgments require the defendants to pay penalties and disgorgement totaling $300,000, and permanently bar them from promotional activities and other dealings involving penny stocks. The defendants consented to the judgments without admitting or denying the SEC's allegations.
The SEC's complaint, originally filed Feb. 7, charged Wall Street Capital Funding LLC, Cardwell, Campbell, and Hume with producing and distributing phony promotional materials styled as "Wall Street News Alerts" touting penny-stock companies.
In its complaint the SEC had alleged that WSCF issued "investment opinions," emails, and web profiles that would typically express positive opinions about penny-stock companies, their business prospects, and the future direction of their stock to create a positive financial profile for the fictitious company.
Materials produced for one such company, PrimeGen Energy Corp., purported that the company had great success drilling for oil in 2009 and 2010, according to the SEC.
However, the SEC claimed that PrimeGen was a non-existent company with a corporate headquarters that consisted of a rented mailbox in a UPS Store opened with a "do-not-forward instruction;" a telephone line that was unattended; and a web page that was generated by copying the source code from another company's web site.
Along with the penalties and disgorgement required by the settlement with the SEC, the defendants are permanently banned from touting and other dealings involving penny stocks.