SEC Enforcement Actions January – June, 2011

Fraud, Misrepresentation and Sale of Unregistered Securities State and Federal Court Litigation Attorney, Russell L. Forkey, Esq.

The Securities and Exchange Commission periodically announces enforcement actions that have recently been filed by it. Periodically, we review these actions and provide selective information concerning what we feel relate to important issues or matters that have a wide alleged impact on investors.

January – June, 2011:

The Securities and Exchange Commission today charged Ronald Abernathy and Arthur Weiss with orchestrating a $560,000 securities fraud through their company, Sovereign International Group, LLC (“SIG”). Read More.

June 25, 2011:

Morgan Asset Management, Inc., Morgan Keegan & Company, Inc., James Kelsoe, Jr. and Joseph Thompson Weller.

Approximately, 39,000 investors lose $1.5 billion dollars.

Recently, the Securities and Exchange Commission (SEC) announced that it had agreed to accept a settlement proposed by Morgan Asset Management, Inc., Morgan Keegan & Company, Inc., James C. Kelsoe, Jr., and Joseph Thompson Weller in an administrative action brought by the SEC relating to, among other things, the following funds:

• RKM Advantage Income Fund, Inc. n/k/a the Helios Advantage Income Fund, Inc.
• RKM High Income Fund, Inc. n/k/a the Helios High Income Fund, Inc.
• RKM Multi-Sector High Income Fund, Inc. n/k/a Helios Multi-Sector High Income Fund, Inc.
• Morgan Keegan Select Fund, Inc. n/k/a Helios Select Income Fund, Inc.
• RKM Strategic Income Fund, Inc. n/k/a the Helios Strategic Income Fund, Inc.

The type of conducted which contributed to the losses outlined above can be gleaned from the SEC’s Corrected Order Making Findings Imposing Remedial Sanctions and Cease and deist Order, which can be found by following the highlighted link. Some of these findings are set forth below. Read More.

June 28, 2011:

SEC v. Michael E. Kelly, et al., Case No. 1:07-CV-4979 in the United States District Court for the Northern District of Illinois

Court Enters Final Judgment Against Georgia Resident William K. Boston, Jr., Texas Resident Warren T. Chambers And Their Business, Century Estate Planning, Inc.

The Securities and Exchange Commission recently announced that on June 22, 2011, Judge Elaine Bucklo of the United States District Court for the Northern District of Illinois entered a final judgment against William K. Boston, Jr., of Canton, Georgia, Warren T. Chambers, of Leander, Texas, and Century Estate Planning, Inc. (Century Estate), their business. Read More.

June 30, 2011:

SEC v. Brian Gibson, Civil Action No. 0:11-cv-61458-WPD (U.S. District Court for the Southern District of Florida).

SEC v. Douglas Newton and Real American Brands, Inc., n/k/a Real American Capital Corp., Civil Action No. 0:11-cv-61455-WJZ (U.S. District Court for the Southern District of Florida).

SEC v. Donald W. Klein and KCM Holdings Corp. Civil Action No. 0:11-cv-61457 (U.S. District Court for the Southern District of Florida).

SEC v. Thomas Schroepfer a/k/a Thomas Schroepfer Baetsen, Charles Fuentes, and Smokefree Innotec, Inc., Civil Action No. 0:11-cv-61454 (U.S. District Court for the Southern District of Florida).

The Securities and Exchange Commission recently announced that it charged three CEOs, their companies, and two penny stock promoters with securities fraud for their roles in various schemes to manipulate the volume and price of microcap stocks and illegally generate stock sales. The schemes featured illicit kickbacks, a bribe to a purported corrupt broker, and the creation of a website to deliver e-mail blasts to potential investors. Read More.

June 30, 2011:

Securities and Exchange Commission v. Shawn A. Icely, Civil Action No. 8:10-CV-2363-T17-EAK-AEP (M.D. Fla.)

The Securities and Exchange Commission recently announced that on June 20, 2011, the United States District Court for the Middle District of Florida entered a final judgment of permanent injunction and other relief against Defendant Shawn A. Icely. The final judgment enjoins Icely from violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5. In addition to injunctive relief, the final judgment orders Icely to pay disgorgement of $391,435.26, prejudgment interest of $20,316.76, and imposes a civil penalty of $130,000. Icely consented to entry of the final judgment without admitting or denying any of the allegations in the complaint.

The Commission commenced this action by filing its complaint against Icely on October 21, 2010. The complaint alleges Icely violated the antifraud provisions of the federal securities laws in connection with his misappropriation of hundreds of thousands of dollars from customers of American Portfolios Financial Services, Inc. while he was employed there as a registered representative.

June 30, 2011:

SEC v. Robert M. Esposito, Gregory A. King, Jack R. Belluscio and Anscott Industries, Inc., C.A. No. 08:00494 T26 (M.D. Fla.) (RAL)

FINAL JUGMENTS ENTERED AGAINST ROBERT M. ESPOSITO AND GREGORY A. KING ORDERING OVER $20 MILLION IN DISGORGEMENT AND CIVIL PENALTIES IN FRAUDULENT TOUTING CASE. Read More.