2003-10-16 sec-litreleases litigation_release 68 KB 5,850 chars

SEC v. David M. Wolfson; Gino Carlucci; Sukumo, Ltd.; NuWay Holding, Inc.; Momentous Group, LLC; Leeward Consulting Group, LLC, et al., No. LR-18413, District of Utah (Oct. 16, 2003) — Press Release

raw: David M. Wolfson et al.

David M. Wolfson et al., No. LR-18413 (Oct. 16, 2003)

Caption: SEC v. David M. Wolfson, et al.

summary

David M. Wolfson, Gino Carlucci, and Sukumo, Ltd. defrauded over 1,100 international investors by selling restricted microcap stocks through a Laos-based boiler room, falsely claiming a 2% commission while siphoning 70% of $16M in proceeds, manipulating stock prices, and filing false SEC reports, leading to SEC charges and asset freezes.

paragraph

The SEC charged David M. Wolfson, Gino Carlucci, and Sukumo, Ltd. with orchestrating a $16 million fraud targeting investors in the UK, Australia, and New Zealand by selling restricted Regulation S shares in five U.S. microcap issuers—Stem Genetics, F10 Oil & Gas, Diversified Financial Resources, Valesc Holdings, and NCI Holdings. Sukumo misrepresented its commission as 2% while actually taking 70% of proceeds, concealed the restricted nature of the shares, and falsely portrayed itself as a buyer rather than a sales agent, while Wolfson-controlled entities diverted an additional 15–20% of funds. Defendants manipulated stock prices on the OTC Bulletin Board and filed false SEC reports, with corporate officers falsely certifying filings, resulting in charges under Sections 17(a) and 10(b) of the securities laws and Rule 10b-5, along with reporting violations under Section 13(a).

narrative

From late 2002, David M. Wolfson and Gino Carlucci, based in Salt Lake City, partnered with Sukumo, Ltd. in Vientiane, Laos, to run a boiler room scheme that defrauded over 1,100 investors primarily in the UK, Australia, and New Zealand by selling restricted Regulation S shares in five U.S. microcap companies: Stem Genetics, F10 Oil & Gas, Diversified Financial Resources, Valesc Holdings, and NCI Holdings. Sukumo falsely told investors it received only a 2% commission on sales, when in reality it took 70% of the $16 million raised, while also concealing that the shares were restricted and misrepresenting its role as a purchaser rather than a sales agent earning a massive commission. Wolfson and affiliated entities—NuWay Holding, Momentous Group, and Leeward Consulting—siphoned an additional 15–20% of proceeds, while executives from the issuers manipulated stock prices on the OTC Bulletin Board, including Jon Marple and Grateful Internet Associates for F10, John Chapman for Diversified, and Jeremy Kraus and Samuel Cohen for Valesc. The issuers filed false SEC reports, omitting material facts about commissions, price manipulation, and Wolfson’s financial interests, and corporate officers falsely certified these filings in violation of Rule 13a-14. The SEC charged all defendants with violations of Section 17(a) of the Securities Act, Section 10(b) and Rule 10b-5 of the Exchange Act, and multiple reporting violations under Section 13(a) and related rules. On October 16, 2003, a federal judge granted the SEC’s request for a temporary restraining order and asset freeze against most defendants, halting further fraud and preserving assets for potential restitution.

Enriched metadata

Scheme: boiler-room (100%)
Court: District of Utah
Outcome: charged
Victims: 1,100
Entity: David M. Wolfson

Classified boiler-room(confidence 100%). EDGAR detection: forms Form D· recall 50% / precision 4%. detection rule →

Extracted insights

Dollar amounts 1

$16.00M $16 million $10M–$100M

Entities 2

person john chapman
agency Securities and Exchange Commission

Triples 17

U.S. Securities and Exchange Commission Filed a Complaint Against twenty-one individuals and entities involved in a scheme to sell securities in five United States-based microcap issuers to hundreds of investors located primarily in the United Kingdom, Australia and New Zealand through a boiler room located in Vientiane, Laos
David M. Wolfson and Gino Carlucci Organized a scheme To defraud hundreds of overseas investors
Sukumo Raised at least $16 million From more than 1,100 investors by selling restricted Regulation S shares in Stem Genetics, Inc., F10 Oil & Gas Properties, Diversified Financial Resources Corporation, Valesc Holdings, Inc., and NCI Holdings, Inc.
Sukumo Wire transferred 70% Of the offering proceeds to Sukumo
Sukumo Wire transferred 15% to 20% Of the proceeds to Wolfson or entities under his control
Wolfson and persons affiliated with F10, Diversified and Valesc Manipulated the prices Of those securities in trading on the OTC Bulletin Board
Sukumo Misrepresented the amount Of its commissions by telling investors, orally and in writing, it was receiving only 2% of the sales price of the stock rather than the 70% it was actually receiving
Sukumo Failed to inform investors The stock they were purchasing was restricted stock
The issuers Stated in their filings That Sukumo was purchasing shares from the issuers when, in fact, it was simply acting as a sales agent for the issuers for a 70% commission
The issuers Failed to disclose That Wolfson and the entities controlled by him, NuWay Holding, Inc., Momentous Group, LLC, and Leeward Consulting Group, LLC, were receiving 15% to 20% of the offering proceeds
Stem Genetics and its chief executive officer, Howard Robertson Made material misrepresentations On the company's web site concerning Stem Genetics's business operations
F10, Diversified and Valesc Failed to disclose That the price of their stock was being manipulated in trading on the OTC Bulletin Board
Wolfson, Momentous, Jon R. Marple, the son of F10's principal officers, and by his company Grateful Internet Associates, LLC Manipulated the price Of F10 stock
John Chapman Manipulated the price Of Diversified stock
Jeremy D. Kraus, Valesc's chief executive officer and by Samuel Cohen Manipulated the price Of Valesc stock
The Commission Seeks the entry of temporary restraining orders Against Sukumo, which is also known as The Sukumo Group, The Fujiwara Group, First Chartered Capital Corporation, First Colonial Trust, First China Capital, and International Investment Holding
The Commission Seeks the entry of preliminary and permanent injunctions Against Wolfson, Carlucci, NuWay Holding, Inc.; Momentous Group, LLC; Leeward Consulting Group, LLC; Stem Genetics, Inc.; Howard H. Robertson, M.D.; G&G Capital, LLC; F10 Oil and Gas Properties, Inc.; Jon H.

View original SEC litigation releasesec.gov

Extracted body text (5,850c)

U.S. Securities and Exchange Commission Litigation Release No.18413 / October 16, 2003 S.E.C. v. David M. Wolfson et al., Docket No. 2:03CV00914DAK (USDC, D.Ut.) On October 16, 2003, the Securities and Exchange Commission filed a Complaint in the United States District Court for the District of Utah, against twenty-one individuals and entities involved in a scheme to sell securities in five United States-based microcap issuers to hundreds of investors located primarily in the United Kingdom, Australia and New Zealand through a boiler room located in Vientiane, Laos. The Complaint alleges that since late 2002, hundreds of overseas investors have been defrauded by a scheme organized by David M. Wolfson and Gino Carlucci of Salt Lake City, Utah, and Sukumo, Ltd. of Vientiane, Laos. It is further alleged that Sukumo raised at least $16 million from more than 1,100 investors by selling restricted Regulation S shares in Stem Genetics, Inc., F10 Oil & Gas Properties, Diversified Financial Resources Corporation, Valesc Holdings, Inc., and NCI Holdings, Inc., with 70% of the offering proceeds wired to Sukumo and 15% to 20% of the proceeds wired to Wolfson or entities under his control. It is further alleged that Wolfson and persons affiliated with F10, Diversified and Valesc manipulated the prices of those securities in trading on the OTC Bulletin Board, thereby inflating the price Sukumo charged investors. Finally, it is alleged that Stem Genetics, F10, Diversified, Valesc and NCIH, aided and abetted by certain of their officers, made false filings with the Commission and that those officers falsely certified the filings of the issuers when those filings contained material misrepresentations and omitted to state material facts. In making its sales of securities Sukumo allegedly misrepresented the amount of its commissions by telling investors, orally and in writing, it was receiving only 2% of the sales price of the stock rather than the 70% it was actually receiving. Sukumo also allegedly failed to inform investors the stock they were purchasing was restricted stock. The issuers allegedly stated in their filings that Sukumo was purchasing shares from the issuers when, in fact, it was simply acting as a sales agent for the issuers for a 70% commission. The issuers also allegedly failed, in some or all of their filings, to disclose that Wolfson and the entities controlled by him, NuWay Holding, Inc., Momentous Group, LLC, and Leeward Consulting Group, LLC, were receiving 15% to 20% of the offering proceeds. In addition to these misrepresentations, it is alleged that Stem Genetics and its chief executive officer, Howard Robertson, made material misrepresentations on the company's web site concerning Stem Genetics's business operations. Finally, F10, Diversified and Valesc allegedly failed to disclose that the price of their stock was being manipulated in trading on the OTC Bulletin Board. It is alleged that the price of F10 stock was manipulated by Wolfson, Momentous, Jon R. Marple, the son of F10's principal officers, and by his company Grateful Internet Associates, LLC. It is alleged the price of Diversified stock was manipulated by John Chapman, Diversified's chief executive officer. It is also alleged the price of Valesc stock was manipulated by Jeremy D. Kraus, Valesc's chief executive officer and by Samuel Cohen, the company's chief financial officer. The Commission seeks the entry of temporary restraining orders against Sukumo, which is also known as The Sukumo Group, The Fujiwara Group, First Chartered Capital Corporation, First Colonial Trust, First China Capital, and International Investment Holding, and Michael Sydney Newman, its control person. The Commission also seeks the entry of preliminary and permanent injunctions against Wolfson, Carlucci, NuWay Holding, Inc.; Momentous Group, LLC; Leeward Consulting Group, LLC; Stem Genetics, Inc.; Howard H. Robertson, M.D.; G&G Capital, LLC; F10 Oil and Gas Properties, Inc.; Jon H. Marple; Mary E. Blake; Jon R. Marple; Grateful Internet Associates, LLC; Diversified Financial Resources Corporation; John Chapman; Valesc Holdings, Inc.; Jeremy D. Kraus; Samuel Cohen; NCI Holdings, Inc. Asset freezes are sought against all defendants except Diversified, Chapman, Valesc, Kraus and Cohen. The Complaint alleges all the defendants in the action have been violating 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 promulgated thereunder. In addition, the Complaint alleges F10, Diversified, Valesc and NCIH have been violating the issuer reporting provision of Section 13(a) of the Exchange Act and that: F10 and Valesc violated Rules 12b-20, 13a-1 and 13a-13 under the Exchange Act by filing false annual and quarterly reports; Diversified violated Rules 12b-20, 13a-1, 13a-11 and 13a-13 by filing false annual, current and quarterly reports; NCIH violated Rules 12b-20, 13a-11 and 13a-13 by filing false current and quarterly reports. The Complaint also alleges that Jon H. Marple and Blake aided and abetted F10's reporting violations and that they violated Rule 13a-14 under the Exchange Act by falsely certifying those reports. Kraus and Cohen were charged with aiding and abetting Valesc's reporting violations and with falsely certifying its filings. The Complaint also alleges that Carlucci aided and abetted NCIH's reporting violation and that he falsely certified its filings. On October 16, 2003, the Honorable Dale A. Kimball, United States District Judge, granted the Commission's application and issued a temporary restraining order, asset freeze and the other requested relief. Judge Kimball also scheduled a December, 2003, hearing on the Commission's application for a preliminary injunction. SEC Complaint in this matter

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