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Source: Securities and Exchange Commission

The Securities and Exchange Commission today announced charges against three individuals and a related business for their roles in two microcap fraud schemes. The Commission, in February 2018, suspended trading in the three microcap companies, Cherubim Interests, Inc., PDX Partners, Inc., and Victura Construction Group, Inc., because of concerns about the adequacy and accuracy of information in the marketplace resulting from false and misleading statements made in one of the schemes.

The SEC’s complaint alleges that between November 2017 and February 2018, Patrick Jevon Johnson, CEO of Cherubim and Victura Construction, and board member Charles Everett fabricated debts owed by the companies. According to the complaint, a third party acquired the bogus debt, extinguished it in exchange for Cheribum and Victura shares and quickly sold them into the public market without registering the sales with the SEC or an exemption from registration. According to the SEC’s complaint, Everett received kickbacks for his role in the scheme.

The SEC’s complaint further alleges that soon after these fraudulent debt exchanges, Johnson and Frank Ekejija, the principal of purported private equity fund NVC Fund, LLC, also “pumped” the prices of the stock of Cherubim, PDX Partners and Victura Construction. The complaint alleges that Ekejija worked with Johnson to prepare and issue false and misleading public statements about the value and integrity of assets NVC Fund would be selling to the companies, which caused the stock prices of the companies to rise.

The SEC’s complaint, filed in the U.S. District Court for the Central District of California, charges Johnson and Everett with violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and with violations of the registration provisions of Sections 5(a) and (c) of the Securities Act. The complaint and seeks a permanent injunction, civil penalties, and officer and director and penny stock bars against Johnson and Everett, and disgorgement with prejudgment interest against Everett. The complaint also charges NVC Fund and Ekejija with violations of the antifraud provisions of Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder, and seeks a permanent injunction and civil penalties.

The SEC’s investigation was conducted by Roberto A. Tercero, Manuel Vazquez, and Carol Kim and supervised by Gary Y. Leung as part of the Microcap Fraud Task Force. The litigation will be led by Michael Sew Hoy and supervised by Amy J. Longo. The SEC appreciates the assistance of OTC Markets Group, Inc. and the Financial Industry Regulatory Authority.

MIL OSI USA News