SEC v. SPENCER PHARMACEUTICAL INC.; JEAN-FRANCOIS AMYOT; MAXIMILIEN ARELLA; IAN MORRICE; LAB MEDIA INC.; and HILBROY ADVISORY INC., No. 1:12-cv-12334, District of Massachusetts (Dec. 17, 2012) — Complaint

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
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SECURITIES AND EXCHANGE COMMISSION, )
Plaintiff,
v.
SPENCER PHARMACEUTICAL INC.,
JEAN-FRAN<;OIS AMYOT,
MAXIMILIEN ARELLA,
IAN MORRICE,
lAB MEDIA INC. and
HILBROY
ADVISORY INC.,
Defendants.
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Case No.
JURY TRIAL DEMANDED
COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF
Plaintiff Securities and Exchange Commission (''the Commission") alleges the following
against defendants Spencer Pharmaceutical Inc.
("Spencer"),
Jean-Fran~ois Amyot ("Amyot"),
Maximilien Arella ("Arella"), Ian Morrice ("Morrice"), lAB Media Inc. ("lAB Media"), and
Hilbroy Advisory Inc.
("Hilbroy"):
PRELIMINARY STATEMENT
1. This enforcement action concerns a "pump-and-dump" scheme whereby
defendants artificially
"pumped" up the price of a publicly-traded company through the
dissemination
of false positive information about the company, after which they "dumped" the
stock into the marketplace to take advantage of the artificially high stock price. The scheme in
this case involved Spencer, a purported pharmaceutical company with addresses in Boston,
Massachusetts, and in Canada. The scheme was orchestrated by Amyot, who was an officer
of

Spencer until November 2009 and then continued to exercise control over the affairs of the
company. Amyot was assisted by Arella and Morrice, who became officers and directors
of
Spencer in November 2009, and together they effected the "pump" of Spencer's stock price by
disseminating false information about Spencer through two public relations companies that
Amyot controlled (lAB Media and Hilbroy).
2. The
"pump-and-dump" started in June 2010 and accelerated in November 2010,
when Spencer began issuing a string
of false and misleading press releases claiming that it had
received an unsolicited buyout offer from a Mideast company. Arella and Morrice worked with
Amyot to create and disseminate the misleading press releases. While Spencer was issuing the
press releases, Amyot, Arella, Morrice, lAB Media, and Hilbroy were conducting a promotional
campaign using internet websites and newsletters to tout Spencer and the buyout offer. When
Spencer announced on November 11,
2010 that the Mideast company proposed to pay $0.97 per
share-or $245 million-for the company, the price of Spencer stock more than doubled in two
days -  opening at
$0.25 per share on November 1 0 and closing at $0.60 per share on
November 12. The daily trading volume skyrocketed as well, reaching almost six million shares
traded on November 11, 2010, compared to a daily average
ofless than 50,000 shares during the
previous three months.
3. The proposed buyout offer was pure fiction, but Amyot's profits from dumping
Spencer stock were very real. Between November I,
2010 and April 18, 2011, Amyot sold
approximately 36 million Spencer shares for gross proceeds
of more than $5.8 million. Amyot
and Arella also orchestrated the deposit
of 12 million Spencer shares into an account controlled
by Amyot through a series
of transfers done to evade restrictions and securities registration
2

requirements.
4. Through the activities alleged in this
Complaint, (1) all the defendants engaged in:
(a) fraud in the offer
or sale of securities, in violation of Section 17(a)(l) and (3) of the Securities
Act
of 1933 ("Securities Act"), and (b) fraudulent or deceptive conduct in connection with the
purchase or sale
of securities, in violation of Section lO(b) of the Securities Exchange Act of
1934 ("Exchange Act") and Rules 10b-5(a) and (c) thereunder; (2) Spencer, Amyot, Arella and
Morrice engaged in: (a) fraud in the offer
or sale of securities, in violation of Section 17(a)(2) of
the Securities Act, and (b) fraudulent or deceptive conduct in connection with the purchase or
sale of securities, in violation of Section lO(b) of the Exchange Act and Rule 10b-5(b)
thereunder; (3) Arella, Morrice, lAB Media, and Hilbroy aided and abetted Spencer's violations
of Section 17(a) of the Securities Act, Section IO(b) of the Exchange Act, and Rule IOb-5;
(4) Amyot had control person liability for Spencer's violations
of Section IO(b) of the Exchange
Act, and Rule IOb-5; and (5) Spencer, Amyot, and Arella engaged in the sale
of unregistered
securities in violation
of Sections 5(a) and 5(c) of the Securities Act.
5. Accordingly, the
Commission seeks: (a) a permanent injunction prohibiting the
defendants from further violations
of the relevant provisions of the federal securities laws;
(b) disgorgement of the defendants' ill-gotten gains, plus pre-judgment interest; (c) the
imposition
of civil penalties due to the egregious nature of the defendants' violations; (d) an
order barring Amyot, Arella, and Morrice from serving as an officer
or director of a public
company; and (e) an order barring Amyot, Arella, and Morrice from participating in an offering
of a "penny stock" as defined in Section 3(a)(51) ofthe Exchange Act.
3

JURISDICTION
6. The Commission seeks a permanent injunction and disgorgement as to all
defendants pursuant to
Section 20(b)
of the Securities Act [15 U.S.C. §77t(b)] and Section
21(d)(l)
of the Exchange Act. The Commission seeks civil penalties as to all defendants
pursuant to
Section 20(d)
of the Securities Act [15 U.S.C. §77t(d)] and Section 21(d)(3) of the
Exchange Act [15
U.S.C. §78u(d)(3)]. The Commission seeks an officer/director bar as to
defendants Amyot, Arella, and Morrice pursuant to
Section 21(d)(2)
of the Exchange Act
[15 U.S.C. §78u(d)(2)]. The Commission seeks a penny stock bar as to defendants Amyot,
Arella, and Morrice pursuant to
Section 20(g) of the Securities Act [15 U.S.C. §77t(g)] and
Section 21(d)(6)(B)
of the Exchange Act [15 U.S.C. §78u(d)(6)(B)].
7. This Court has jurisdiction over this action pursuant to Sections 20(d) and 22(a)
of the Securities Act [15 U.S.C. §§77t(d), 77v(a)] and Sections 21(d), 21(e) and 27 of the
Exchange Act [15
U.S.C. §§78u(d), 78u(e), 78aa]. Venue is proper in this District because, at all
relevant times,
Spencer maintained an office in Boston.
8. In connection with the conduct described in this Complaint, the defendants
directly or indirectly made use
of the mails or the means or instruments of transportation or
communication in interstate commerce.
9. The defendants' conduct involved fraud, deceit, or deliberate
or reckless disregard
of regulatory requirements, and resulted in substantial loss, or significant risk of substantial loss,
to other persons.
4

DEFENDANTS
10. Spencer is a Delaware corporation that purports to be a phannaceutical company
based in Boston, Massachusetts, with a presence in Canada as well.
At all relevant times, its
common stock was traded under the symbol
"SPPH" on OTC Link (formerly, "the Pink Sheets")
operated by OTC Markets Group Inc. At all relevant times, its common stock was a "penny
stock"
as that term is defined
in Section 3(a)(51) of the Exchange Act [15 U.S.C. §78c(a)(51)].
11. Amyot, age 40, formerly lived in Quebec, Canada, but may recently have moved
to the Bahamas. He was an officer and director of Spencer until November 2009.
12. Arella, age 56, lives in Montreal, Canada. He became president, chief executive
officer, and a director
of Spencer in November 2009.
13. Morrice, age 52, lives in Ottawa, Canada. He became executive vice president,
corporate secretary, and a director
of Spencer in November 2009.
14. lAB Media is a Canadian corporation controlled by Amyot. lAB Media
describes itself as a "financial advertising and consulting firm" for small-cap companies. lAB
Media had a contract to provide public relations services to Spencer.
15. Hilbroy is a Canadian corporation controlled by Amyot. Hilbroy describes itself
as an
"advisory and consultancy company". Hilbroy shares an address with lAB Media, and it
assisted lAB Media in its public relations activities on behalf
of Spencer.
5

STATEMENT OF FACTS
The Origin
of Spencer
16. In 1998, Cortez Development Ltd. was incorporated in Delaware. By 2008, after
several name changes, the company was known as Emergensys Corp.
("Emergensys,), and
Amyot was its president.
17. In February 2008, Wolverine Oil and Gas Corp. ("Wolverine,') was incorporated
in Nevada, and Amyot was its only director.
18. On May 27,2009, Amyot filed an amendment to change Wolverine's name to
Spencer Pharmaceutical Inc.
("Spencer").
19. On June 23, 2009, Amyot caused Emergensys to enter into a reverse merger with
the newly-renamed Spencer.
20. On July 13, 2009, Emergensys announced that it had entered into the reverse
merger and that it was going to change its own name to Spencer.
21.
On November 16, 2009, Amyot resigned as vice president
of Spencer, and Arella
became a director and was appointed president and
CEO.
22. On November 22, 2009, Amyot resigned as a director
of Spencer, and Morrice
became a director and was appointed executive vice president and secretary.
23. Although he ceased to be an officer or director
of Spencer after November 2009,
Amyot continued to exert control over the company's affairs.
Spencer's Purported Business Activities and Financial Condition
24. On August 10, 2009, Spencer entered into an "exclusive patent license
agreement" with 4413261 Canada Inc., a Canadian company that claimed to have the exclusive
6

right to market U.S. Patent 2007/0077305-A1, which concerns methods to accelerate the hwnan
body's absorption
of certain drugs. Arella and Morrice signed the agreement for both Spencer
and 4413261 Canada Inc.
25. In reality,
U.S. Patent 2007/0077305-Al had not been approved. One
of the
scientists listed on Spencer's Scientific Advisory Board applied for patent
2007/0077305-Al, but
the
U.S. Patent and Trademark Office ("PTO") denied the application.
26.
On November 2, 2009, Spencer entered into a research contract with certain
scientists at the
Universite du Quebec
a Montreal ("the UQAM"), ostensibly to develop the
technology covered by
Patent 2007/0077305-A1. The contract required Spencer to pay a total
of
$300,000 to the UQAM in six installments between November 2009 and May 2011. Arella
signed the contract for Spencer.
27.
On December 22, 2009, Amyot caused Hilbroy to loan $50,000 to Spencer, which
used the money for the first required payment to the UQAM.
28. On February 10,2010, a chartered accountant in Montreal released audited 2009
financial statements for Spencer. The balance sheet indicated that Spencer had assets of$57,600
(supposedly related to the patent), liabilities of$57,600 (primarily the $50,000 loan from
Hilbroy), and a
"shareholders' deficit"
of more than $17 million (meaning that investors had
supposedly put more than $17 million into the company without receiving a return, although
there is no evidence that Spencer had ever received the money). The earnings statement
indicated that Spencer had no revenue in
2009.
29. On April22, 2010, Amyot caused Hilbroy to loan $50,000 to Spencer, which used
the money for the next required payment to the
UQAM.
7

30. On May 8, 201 0, the chartered accountant released an interim financial statement
for Spencer for the first quarter of201
0. The interim statement indicated that Spencer's financial
condition had barely changed since the audited
2009 financial statements prepared in February
2010. The interim statement also indicated that Spencer had no revenue and no operating
expenses in the first quarter
of2010.
31. On May 11, 2010, Amyot caused Hilbroy to loan $50,000 to Spencer, which used
the money for the next required payment to the
UQAM.
32. On August 20, 2010, the chartered accountant released an interim financial
statement for Spencer for the second quarter
of2010. The interim statement indicated that
Spencer had assets
of $108,028 (supposedly related to the patent), liabilities of $217,050
(accounts payable, accruals, and loans from an "affiliated
company"-i.e., Hilbroy), and a
purported shareholders' deficit
of more than $17 million. The interim statement also indicated
that Spencer had no revenue and a net loss
of $112,892 in the second quarter of 2010.
33. On October 13,2010, Amyot caused Hilbroy to loan $50,000 to Spencer, which
used the money to make the next required payment to the
UQAM.
34. On November 3, 2010, the chartered accountant released an interim financial
statement for Spencer for the third quarter
of2010. The interim statement indicated that Spencer
had assets of$111,532 (supposedly related to the patent), liabilities of$303,855 (accounts
payable, accruals, and loans from an
"affiliated company"-i.e., Hilbroy), and a purported
shareholders' deficit of more than $17 million. The interim statement also indicated that Spencer
had no revenue and a net loss
of $188,660 in the third quarter of 2010.
8

Issuance of Spencer Common Stock
35. On November 22,2009, Spencer entered into a letter agreement with Morrice
whereby Morrice would receive
$1 0,000 per month as executive vice president and $2,000 per
month as a director. In addition, a company controlled by Morrice received 2.5 million shares
of
Spencer common stock as a signing bonus.
36.
On November 26, 2009, the Spencer Board
of Directors approved the issuance of
209 million shares of common stock. The recipients included:
Arella-36 million shares;
Hilbroy -  24 million shares;
Cunningham-Adams Small Cap Fund
("Small Cap Fund"), an investment
fund controlled by
Amyot-23 million shares; and
Finkelstein Capital
("Finkelstein"), a Canadian corporation ostensibly
owned by Amyot's brother but actually controlled by
Amyot-22 million
shares.
None
of the recipients had made investments in Spencer that would have justified the issuance of
millions of shares of the company's stock.
The Beginning of the "Pump and Dump" Scheme
37. As of2009, Amyot had the practice of taking control of small, micro-cap
companies, using lAB Media and Hilbroy to promote the companies in order to boost the stock
price, and then selling his stake in the companies for a profit.
38.
On December 10, 2009, Spencer and lAB Media entered into a "securities
awareness agreement" whereby lAB Media agreed to prepare press releases, arrange for
publicity on the internet, and prepare research reports on Spencer in exchange for 24 million
9

shares of common stock. The agreement was signed by Arella for Spencer and by Amyot for
lAB Media.
39.
On March 8, 2010, Spencer filed an Initial Company Information and Disclosure
Statement with the
OTC, a document required for its listing on OTC Links. The Disclosure
Statement, which Arella signed as
President and CEO, described the company in glowing terms:
The Company is a newly formed company specializing in a controlled
release
of existing therapeutics molecules in order to potentially
increase their bio-availability and systemic efficacy in the challenging
area
of drugs delivered to the Central Nervous System through an
innovative approach that allows the crossing
of the blood-brain barrier
and potentially reduce the side effects
of drugs used for neurological
diseases and brain cancer
....
[The company is] a multi-disciplinary company which develops
products from patented drug platform technologies which deliver
drugs more efficiently to the body. Specifically these drugs are for
the treatment
of Neurological diseases such as Alzheimer/Parkinson
and Brain Cancer as well as patented slow release drug delivery
technology for the treatment oftype-2 diabetes/arthritis and other
potential applications.
Spencer
Pharmaceutical offers a wide range
of drug delivery
platforms designed on the impact target markets based on both
demographics and geographic_al trends.
Those statements were false and misleading. In reality, Spencer had no business activities apart
from the single contract to fund research at the
UQAM-research supposedly related to a U.S.
patent that, in fact, had been denied by the PTO.
40. The Disclosure Statement also indicated that Spencer's "head office" and
"administrative and legal offices" were located at
8 Faneuil Hall in Boston. That statement was
false and misleading. In reality, the Boston address was merely a "virtual office" that answered
10

phone calls and forwarded mail. Amyot signed the contract for the "virtual office", made the
payments, and directed that all
of Spencer's mail should be forwarded to him at Hilbroy.
41. Beginning in June
2010, the defendants began a coordinated promotional
campaign to tout Spencer and its stock that had three components.
a. Spencer issued press releases about purported developments in its
business. Amyot drafted many
of the press releases and often sent them to Arella and Morrice
with instructions about when to release them. Arella or Morrice were listed as contacts for the
company.
b. lAB Media posted articles about Spencer on its own website called
"ItsAIIBull.net". Most
of the stories commented favorably on the company's recent press
releases and encouraged investors to buy Spencer stock soon before the price started rising. The
website's fine print disclosed that lAB Media had been compensated with
24,000,000 shares of
Spencer stock.
c. lAB Media, Hilbroy, and the
Small Cap Fund, all controlled by Amyot,
paid companies operating internet websites devoted to micro-cap stocks to carry reports and
other publicity about Spencer, and paid other companies to distribute publicity about Spencer to
their lists
of email contacts. The companies receiving these payments included Alpha Trade,
Blue Wave Advisers, Cream Consulting, Diamond Class Consulting,
DMS Consulting,
eMarketer, First Alert Financial, Guidance Marketing, International Ventures Capital, Mass
Financial Group, MVP Advisors, Nebula Stocks, OTC Picks, Penny Payday, Sherwood
Ventures, SmallCapVoice.com, SpeculatingStocks.com, StockRollandRoll,
TST Advisors, VNC
Associates, and
WFWS.
11

42. The promotional campaign was based upon false and misleading statements about
Spencer's business activities.
On many days when Spencer issued false and misleading public
statements, Amyot sold Spencer stock through the
Small Cap fund and through the Cunningham-
Adams Green Fund
("Green Fund"), another investment fund that he controlled.
43.
On June
22,2010, a public news outlet called PinkSheets carried a press release
from Spencer stating that Arella had just been named its president. Arella was quoted as saying:
I am delighted to have the opportunity to work with a company that is
breaking new frontiers with innovative drug release and absorption
systems for the treatment
of metabolic diseases.
Those statements were false and misleading, because Arella had been president
of Spencer since
November 2009 and, more importantly, because Spencer did not own any "innovative drug
release and absorption systems for the treatment
of metabolic diseases" (although some of the
QAMF researchers it was funding were involved in that area).
44. On August 24,2010 at 6:30a.m., a public news outlet called Market Wire carried
a press release from Spencer announcing favorable results for its purported drug delivery
technology.
At 8:03a.m., lAB Media's website posted a positive comment about Spencer's
news:
SPPH released some important news this morning and we think it
could draw some serious investor interest. It seems they are seeing
significant traction with their drug delivery technology, so we think
we could see the trading action in
SPPH heat up today as a result.
At
1: 16 p.m., lAB Media posted a second positive comment:
Investors are responding favorably to the news released this morning
about
SPPH's success in taking its drug delivery technology for
Metform, an important diabetes treatment drug... Keep a close watch
on
SPPH because as more company developments come in, and more
12

investors wake up to the story, we could see more sharp moves to the
upside!
Those statements were false and misleading, because Spencer had no drug delivery technology.
The price
of Spencer stock closed that day at $0.25 per share -up 32% from its closing price on
the prior trading day. The volume
of shares traded soared from 5,000 shares on August 23 to
nearly
190,000 shares on August 24.
45.
On August 26, 2010 at 6:30a.m., Market Wire carried a press release from
Spencer announcing the
"competitive advantages"
of its purported drug delivery technology,
which
"represents a major advancement in oral peptide
or protein delivery." At 7:35a.m., lAB
Media's website posted a positive comment about Spencer's news:
SPPH had another AMAZING day yesterday as we rallied another
20% to close at $0.30. Our readers are now up a whopping 50% from
our initial mention
of SPPH when it was trading $0.20.
Congratulations to all those who jumped in and are now sitting pretty
on top
of some tidy profits! Volume was light in yesterday's session
but we think that will change when investors get wind
oftoday's PR.
Those statements were false and misleading, because Spencer had no drug delivery technology.
The price
of Spencer stock closed that day at $0.32 per share-up 7% from its closing price on
the prior trading day.
46.
On August
30,2010 at 6:30a.m., MarketWire carried a press release from
Spencer announcing that it had added a certain medical researcher to its Scientific Advisory
Board. At 7:35a.m., lAB Media's website posted a positive comment about Spencer's news:
Since we broke through resistance on
SPPH at the $0.25 level,
we've
been marching slowly, but steadily higher. Closing at $0.35 on
Friday, we're now up a very respectable 75% since we alerted our
readers to the name, but we think there could still be substantial
upside remaining as more and more investors come around the SPPH
13

story. Today we got another press release from SPPH which tells us
that there are some serious scientific minds behind the company.
During the day, Amyot's
Small Cap Fund sold 107,833 shares
of Spencer stock (45% of the
day's trading volume) for gross proceeds of$35,529.
47.
On September
1, 2010 at 6:30a.m., MarketWire carried a press release from
Spencer announcing that it was expanding its "patent protection to address the growing epidemic
in diabetes
globally." At 8:05a.m., lAB Media's website posted a positive comment under the
caption
"More great news from SPPH this morning." Those statements were false and
misleading, because
Spencer had no valid patents. During the day, Amyot's Green Fund sold
70,000 shares
of Spencer stock (53% of the day's trading volume) for gross proceeds of$22,363.
48. Spencer continued to issue press releases about its purported business activities
during
September and October 2010.
49. On October 25, 2010 at 6:15a.m.,
Market Wire carried a press release from
Spencer announcing that it had expanded its "licensing talks" with companies in the United
States, Canada, and Europe. These statements were false and misleading, because Spencer was
not engaged in licensing talks with any legitimate companies. During the day, Amyot's
Small
Cap Fund sold 88,100 shares
of Spencer stock (46% of the day's trading volume) for gross
proceeds of$24,921.
50. From June through October 2010, the price
of Spencer stock rose from below
$0.20 per share to $0.30 per share. As
of October 31,2010, Amyot controlled Spencer stock
worth more than $3.2 million through accounts for the Small Cap and Green Funds located at
Tillerman
Securities in the Bahamas.
14

The Pump-and-Dump Based on the Purported Buyout Offer
51. In early November 2010, the pump-and-dump scheme entered a new and more
aggressive phase when Spencer announced that it had received a $245 million buyout offer.
Over the next several months, Spencer issued nearly twenty press releases concerning the
purported buyout offer. Arella was often quoted in the press releases, and Arella
or Morrice
were listed as contacts for the company. Amyot drafted many
of the press releases and
orchestrated the promotional campaign, often giving instructions about when the press releases
should be made public, while Arella and Morrice assisted in drafting the releases and in
arranging for them to be issued to the public, often through Hilbroy. In addition, lAB Media and
Hilbroy continued to pay companies operating internet websites devoted to micro-cap stocks to
carry reports and other publicity about Spencer, and continued to pay other companies to
distribute publicity about Spencer to their lists
of email contacts.
52.
On November 1, 2010, Spencer purportedly received a letter from a Russian
investment firm claiming to represent a company that wanted to acquire Spencer. At
1 0:00 a.m.
the next day (November 2),
Market Wire carried a press release from Spencer announcing that it
had received a letter
of interest concerning a potential acquisition:
Spencer Pharmaceutical Inc. announced today that the company has
received a  letter
of interest by a private equity fund for a proposed
important investment in the shares
of the company.
According to the letter
of interest, the private equity fund has
requested its identity be kept confidential until further discussion and
due diligence is  undertaken. However, no price has yet to be
discussed nor any formal offer made.
"Although it  is very flattering to be courted at this early stage, our
objectives are clear and we
will continue to work with our partners in
licensing our technology for the Met4 as well as our extended release
15

Ibuprofen," said Dr. Arella, President of Spencer Pharmaceutical Inc.
"Naturally,
if a formal offer was to be made by the private equity
fund, the board
of directors would consider, evaluate and recommend
a course
of action to its shareholders," further added Dr. Arella
The final terms and conditions of the transaction will be determined in
a definitive agreement.
No assurances can be provided that a
definitive agreement will be executed. Execution
of a definitive
agreement is subject to, among other things, confirming due diligence
by
Spencer and other conditions and approvals by both companies'
management, board
of directors and shareholders, as appropriate.
During the day, Amyot's
Small Cap Fund sold 57,300 shares
of Spencer stock for gross proceeds
of$15,681.
53.
On November 4, 2010 at
II: I9 a.m., Market Wire carried a press release from
Spencer announcing that it had received an
"unsolicited all-cash offer":
Spencer Pharmaceutical Inc. announced today that it has received an
all-cash offer from a private equity firm. According to the company,
a private equity firm has provided the board
of directors with an all-
cash offer to acquire any and all shares
of the company. The board of
directors has agreed to keep the offer confidential until an investment
bank can be mandated to review the offer, conduct an appropriate due
diligence and recommend a course
of action.
"We are surprised to be receiving an all-cash offer at this stage, and in
order to keep our shareholders informed, we have opted to announce
the receipt
of the offer yet until we can have an independent review of
the offer we will remain quiet as to his details," said Dr. Arella,
president
of Spencer Pharmaceutical Inc. "We don't want to alarm
our shareholders and/or put false hopes that a transaction is imminent
so all we can do at this time is continue with the development
of our
licensing program and further development
of our technology and
business model to create sustainable shareholder
value," further added
Dr. Arella.
The final terms and conditions
of the transaction will be determined in
a definitive agreement. No assurances can be provided that a
definitive agreement will be executed. Execution
of a definitive
agreement is subject to, among other things, confirming due diligence
by
Spencer, and other conditions and approvals by both companies'
management, beard
of directors and shareholders, as appropriate.
16

During the day, Amyot's Small Cap Fund sold 136,290 shares of Spencer stock (45% of the
day's trading volume) for gross proceeds of$36,328. The price
of Spencer stock closed that day
unchanged at
$0.29 per share, but the trading volume jumped from 78,000 shares to 302,000
shares.
54.
On November 9, 2010 at 4:01p.m.,
MarlcetWire carried a press release from
Spencer announcing that it was going to disclose more details about the purported buyout offer
by November 12. The price of Spencer stock closed that day at $0.24 per share.
55.
On November 10, 2010 at 3:31 p.m.,
Market Wire carried a press release from
Spencer announcing that it had hired a Swiss finn called Strategema Capital to advise it about
the purported buyout offer. During the day, Amyot's Small Cap Fund sold 60,000 shares
of
Spencer stock (32% of the day's trading volume) for gross proceeds of$15,650. The price of
Spencer stock closed that day at $0.28 per share-up 17% from its closing price on the prior
trading day
-and the trading volume more than doubled, from less than 72,000 shares to more
than
184,000 shares.
56. On November 11, 2010 at 9:00a.m.,
Market Wire carried a press release from
Spencer announcing that the purported buyout offer was worth $0.97 per share, or $245 million:
Spencer Pharmaceutical Inc. announced today that an unsolicited
offer received
on November 4, 201 0 is at a premium of $0.97 per
share, making the potential transaction valued at $245 million.
According to the buyout offer documents, the purchaser is requiring
any and all shares be tendered for a purchase price
of $0.97 per share
and with the intent to privatize the company. Spencer Pharmaceutical
has opted to continue to keep the purchaser's name
confidential until
such time as a time line can be presented and the approval
of the board
of directors can be obtained.
17

"We will conduct our own due diligence of the purchaser but so far
they have assured us
of their seriousness and have marked this
acquisition as important in terms
of strategy but not in terms of
value," said Dr. Max Arella, President of Spencer Pharmaceutical Inc.
"We will continue with business as usual but this will also be one
of
our priorities," further added Dr. Arella.
At
9:30a.m., trading in Spencer stock opened at $0.31 per
share-up $0.03 (11 %) from its
closing price on the prior trading day. During the day, Amyot's Small Cap and Green Funds
sold a total of2,316,911 shares
of Spencer stock (39% of the day's trading volume) for gross
proceeds
of $976,725. The price closed that day at $0.41 per share-up 46% from its closing
price on the prior trading day
-on record trading volume of nearly six million shares.
57. On November 12, 2010 at 8:00a.m.,
Market Wire carried a press release from
Spencer announcing that its Board
of Directors had approved the potential buyout and expected
to announce the name
of the purchaser by November 19. Arella was quoted as saying:
Although we believe the value
of the company to be more towards
$1.58 per share, the offer
of$0.97 is acceptable and shareholders will
be provided the opportunity to vote on the offer as per the normal
process. We have lots
of work to do in making sure that the offer can
be approved by shareholders as well as regulatory authorities.
At
9:30a.m., trading in Spencer stock opened at $0.49 per
share-up $0.08 (20%) from its
closing price on the prior trading day. During the day, Amyot's Green Fund sold 1,033,220
shares of Spencer stock (39% of the day's volume) for gross proceeds of$501,230. The price
closed that day at $0.60 per
share-up 46% from its closing price on the prior trading day -  on
trading volume
of nearly 2. 7 million shares.
58. In short, between November
10 and 12,2010, defendants pumped up the price of
Spencer stock from $0.24 per share to $0.60 per share (an increase of 150%) by touting the
18

purported $245 million buyout offer. At the same time, Amyot's Small Cap and Green Funds
dumped 3,486,421 shares
of Spencer stock for total gross proceeds of more than $1.5 million.
59.
On November 15, 2010 at 9:24a.m., lAB Media's website celebrated the recent
surge in Spencer's stock price:
It has been a fabulous week for Spencer Pharmaceutical, Inc. It
rallied on monstrous volume the last 2 trading days closing on Friday
at
$0.60, up 186% from last Monday at $0.21. The reason is Spencer
received an all cash buyout offer from an undisclosed party at
$0.97
per share. Spencer retained the services
of a boutiques financial
consultancy company in Switzerland to advise on the transaction.
But here is the question on all investors' lips: Who is this Buyer?
As per their last PR on Friday, it will be revealed by November 19th,
2010. We suggest that you keep a close eye on Spencer as there is
still a lot
of potential benefits to be made as we expect to see an
increase in price and volume when the name
of the buyer will be
released.
At 9:35a.m.,
Mar/ret Wire carried a press release from Spencer with additional information about
the purported buyout offer:
According to ongoing negotiations, the offering party has stipulated
that the Buyout was for
100%
of the shares and that upon an agreed
timeline that the shares will be required to be tendered by all
shareholders. They have also stated that they reserved the right to
acquire shares in the open market prior to the closing
of the
transaction. They have assured that they would place the funds into
escrow and a mutual timeline was to be established. The objective of
the offering party is to take the company private as at the close of the
transaction. The company expects to receive the approval by the
offering party to release their name and contact information on
or
before November 25, 20 I 0.
"We are moving in the right step to assure a transaction is concluded
for our
shareholders," said Dr. Max Arella, President
of Spencer
Pharmaceutical Inc.
"We understand that there is a lot of scientism
[sic] with the planned transaction because
ofthe confidentiality ofthe
buyer and we can only assure our shareholders that we are working
diligently and in good faith. The offering party is not an American
19

company and the cultural differences and language sometimes require
more
attention," further added Dr. Arella.
During the day, Amyot's Small Cap and Green Funds sold a total of707,271 shares
of Spencer
stock
(30% of the day's trading volume) for gross proceeds of$407,391.
60. On November 16, 20 I 0 at 9:05 a.m.,
Market Wire carried a press release from
Spencer that identified the purported buyer as Al-Dora Holdings, a Kuwaiti company:
Spencer Pharmaceutical Inc. disclosed today that the Al-Dora
Holdings is the buyout offering entity.
1
According to information provided to the company, the Al-Dora
Holdings is a Kuwaiti private investment company owned and
managed by some
of the Gulfs richest families. The Al-Dora
Holdings is represented by its chairman, His Excellency Dr. Bandar
AI-Dhafiri and its CEO His Excellency Hussein Al-Awaid.
"We are happy to now be advanced enough to disclose the name of
the acquiring party," said Dr. Max Arella, President of Spencer
Pharmaceutical Inc.
"Even though we are advancing with our
research and licensing we are putting forth all necessary efforts to see
this transaction to a successful conclusion," further added Dr. Arella.
During the day, Amyot's Small-Cap Fund sold 172,120 shares
of Spencer stock (18% of the
day's trading volume) for gross proceeds of$83,048.
61.
On November
23,2010 at 9:00a.m., Market Wire carried a press release from
Spencer announcing that Al-Dorra had committed to give it a non-refundable
$500,000 deposit:
Spencer Pharmaceutical Inc. announced today that it has received an
irrevocable commitment for
$500,000 in the Company from Al-
Dorra. This commitment, the form of which will be determined, will
be non-refundable.
According to the letter by Al-Dorra, they will forward this
commitment
on or before November 30, 2010. The non-refundable
1
The available documents use two different spellings ("Al-Dora" and "Al-Dorra") to refer to the
purported Kuwaiti company. In the allegations that follow, the Commission will use whichever
spelling appears in the relevant document.
20

deposit is intended as a sign of good faith and will enable the
company and its independent financial advisors to properly consider
the
$0.97 offer proposed by Al-Dorra.
It should be noted that even
though the Company will accept this non-refundable commitment,
Company management is obliged by law to review any third party
offer presented.
"This deposit is yet another great gesture by the Al-Dorra group and
their interest in our technologies is unparalleled and we look forward
to hosting the dinner in their honor," said Dr. Max Arella, President
of
Spencer Pharmaceutical Inc. "The $0.97 offer is not yet established
but each significant step, such as this investment, brings
us further to
considering whether such offer is in the best interests
of our
shareholders," further added Dr. Arella.
During the day, Arnyot's Small Cap Fund sold
735,470 shares
of Spencer stock (43% of the
day's trading volume) for gross proceeds of$155,476.
62.
On November 24, 2010 on 9:48a.m.,
Market Wire carried a press release from
Spencer announcing that it was cancelling 36 million shares
of its common stock, which would
boost the purported buyout offer to
$1.1 0 per share, and that a dinner to honor representatives of
Al-Dorra would be held on November 30:
Spencer Pharmaceutical Inc. announced today that it  is in the process
of cancelling 36,000,000 shares, which had been previously issued,
and the said shares will be returned to treasury.
According to the buyout offer
of$245 million, the per share price is
now based on 222,431,359 shares outstanding and therefore the
reflected amount will be at
$1.10 per share. The company expects to
sign a definitive agreement with Al-Dorra upon their official visit to
Canada scheduled for November
30, 2010, where the company will
host a dinner in their honor.
It was previously noted that the company
has the legal requirement to review any third party offer, even
if Al-
Dorra has irrevocably committed to a $500,000 deposit.
"The reduction in outstanding shares is another way to get a better
price for our shareholders," said Dr. Max Arella, President
of Spencer
Pharmaceutical Inc. "Even
if we believe the offer to reflect the value
of our enterprise we will continue to negotiate and look for ways to
increase the value to our shareholders," further added Dr. Arella.
21

During the day, Amyot's Small Cap Fund sold 121,700 shares of Spencer stock for gross
proceeds of$251,436.
63.
On November 30, 2010 at 9:00a.m., MarketWire carried a press release from
Spencer announcing that the dinner to honor representatives
of Al-Dorra had been postponed
until December 8. During the day, Amyot's
Small Cap Fund sold 1,919,636 shares
of Spencer
stock (46%
of the day's trading volume) for gross proceeds of$185,959.
64.
On December 8, 2010 at 10:27 a.m.,
MarketWire carried a press release from
Spencer announcing that the dinner to honor representatives
of Al-Dorra was going ahead that
evening. During the day, Amyot's
Small Cap Fund sold 102,403 shares
of Spencer stock for
gross proceeds
of $23,141. The price closed that day at $0.20 per share-up 11% from its
closing price on the prior trading day.
65.
Spencer received a purported "Conditions to Offer to Purchase Agreement" dated
December 8,
2010 in which Al-Dora supposedly stated that it would put $245 million in escrow
and that the acquisition was expected to close by March 17,
2011.
66. On December
10 at 9:00a.m., Market Wire carried a press release from Spencer
announcing that it had "formalized" the buyout offer from Al-Dorra, and that the offer would
close by March 17,
2011:
Spencer
Pharmaceutical Inc. announced today that it has formalized
the buyout offer with the Al-Dorra Group as a successful result
of
meetings held in Montreal, Canada over the past week.
According to the terms
of the format buyout offer, Al-Dorra will
acquire
Spencer Pharmaceutical for $245 million USD on an all cash
transaction to close on or before March 17,
2011. As per the terms
of
the formal offer, Al-Dorra reserves the right to acquire shares in the
open market and Al-Dorra will deposit
$500,000 in the company's
22

account to be used to pay legal fees, and expenses associated with the
ongoing business operations
of Spencer Pharmaceutical.
"We are very satisfied with the terms of the buyout offer as it is very
beneficial to our
shareholders," said Dr. Max Arella, President
of
Spencer Pharmaceutical Inc. "I would personally like to thank His
Excellency Hussein Al-Awaid for his time and travel commitment in
formalizing the agreement with our board on behalf
of our
shareholders," further added Dr. Arella.
At
9:30a.m., trading in Spencer stock opened at $0.27 per
share-up $0.07 (35%) from its
closing price on the prior trading day. The price closed that day at
$0.29 per
share-up 45%
from the prior
day's close-on trading volume of more than 3.8 million shares.
67.
On December
21 at 9:00a.m., Market Wire carried a press release from Spencer
announcing that it had received the
$500,000 non-refundable deposit from Al-Dorra:
Spencer
Pharmaceutical Inc. announced today that it has received the
$500,000 deposit from Al-Dorra as an ongoing process to close the
$245 million buyout.
According to the company, a third party corporate finance advisory
firm working with Al-Dorra has provided a non-refundable deposit to
the company in the amount of$500,000 to be used for ongoing
business expenses and expenses related to the buyout offer including
but not limited to legal fees.
"We are pleased that the next anticipated step in the process
of the
buyout offer is
completed," said Dr. Max Arella, President
of Spencer
Pharmaceutical Inc.
"We intend to continue to update our
shareholders on the progress
of the buyout offer as it is presented to
us."
During the day, Amyot's Small Cap Fund sold 3,101,242 shares
of Spencer stock (75% of the
day's trading volume) for gross proceeds of$445,111. The next day, the Small Cap Fund sold
1,894,758 shares
of Spencer stock (54% of the day's trading volume) for gross proceeds of
$199,164.
23

68. On January 20, 2011, a public news outlet called RediNews carried a press release
purportedly from Al-Dorra announcing that it was going to spin
off a subsidiary called Hail First
Phanna Inc. ("Hail First Pharma"):
According to the company, Hail First Phanna Inc. is the result
of several
acquisitions and or joint-ventures with international pharmaceutical companies
including but not limited to Spencer Phannaceutical
Inc., a public traded
company listed on the
US OTC Markets (PINK:SPPH).
Those statements were false and misleading because Hail First Pharma had not acquired
or
entered into a joint venture with Spencer. The price of Spencer stock closed that day at $0.21 per
share-up 62% from its closing price on the prior trading day.
69.
On January
26,2011, Amyot sent an email to Karol Schlosser, ostensibly a
director
of an entity in Great Britain called Sterling Stock Investment Ltd. ("Sterling,,), with a
draft letter to be sent from Sterling to Spencer. The letter, which was sent to
Spencer with the
date
of January 31, stated that Sterling was going to guarantee that Al-Dorra had access to $500
million to complete the acquisition
of Spencer. Spencer received a second letter from Schlosser
dated February 3, 2011 confirming the purported guarantee.
70. On January 31, 2011 at 5:30p.m., Market Wire carried a press release from
Spencer announcing that it had received confirmation that Al-Dorra had sufficient funds to
complete the transaction:
Management
of Spencer Phannaceutical Inc. announced that the
Company has received from an investment group mandated by His
Excellency Hussein Al-Awaid (Al-Dorra group) confirmation
of their
intent to prepare availability
of funds for the proposed buy-out of
Spencer. The release of funds is subject to completion of due
diligence and preparation
of final documentation. Specific time-
frame has not changed as per the original parameters previously
24

disclosed in press releases on December lOth, and 14th, 2010
respectively.
During the next day, Amyot's
Small Cap Fund sold 881,574 shares
of Spencer stock (54% of the
day's trading volume) for gross proceeds of$116,719.
71.
On February 4, 2011 at 9:00a.m.,
Market Wire carried a press release from
Spencer announcing that its management had committed to tender its own holdings of Spencer
stock to Al-Dorra:
Spencer Pharmaceutical Inc. announced that the Company
management has committed to tender their shares
of common stock,
which holdings equal to an aggregate
of 48,750,000 common shares
and represent approximately
20%
of the total issued and outstanding
shares
of the common stock of the Company.
Management believes that this commitment represents another step in
the A1-Dorra Holdings buyout process related to the A1-Dorra "Hail
First
Pharma" subsidiary.
It is also important for our shareholders to
know that the
Spencer Pharmaceutical team is working in a dedicated
and cohesive effort to the successful conclusion
of the buyout offer.
During the day, Amyot's Green Fund sold 1,148,500 shares
of Spencer stock (63% of the day's
trading volume) for gross proceeds of$115,238.
72.
On February 16, 2011, the chartered accountant in Montreal released audited
2010 financial statements for Spencer. The balance sheet indicated that Spencer had assets
of
$772,197 ($316,269 supposedly related to the patent and $455,928 in cash, which presumably
represented the balance of the $500,000 deposit), liabilities of$1,643,223 ($471,030 of accounts
payable and accruals and $1,172,
193 in loans payable), and a shareholders' deficit of nearly
$18 million. The earnings statement indicated that
Spencer had no revenue and a net loss
of
$943,196 in 2010.
25

73. As noted above, Spencer had announced on December 10,2010, that the
acquisition by Al-Dorra was expected to close by March 17,
2011. Several investors called the
company with questions about the anticipated transaction. Morrice fielded many
of the calls and
assured the investors that the transaction would close on time.
74.
On March 15,2011, Spencer signed a purported "mutual extension agreement"
with Al-Dorra and Hail First Pharma. The agreement stated:
Spencer Pharmaceutical Inc. has requested an extension to the
closing
of the buy-out offer to finalize and release the independent
animal research analysis to shareholders and stakeholders. Al-Dorra
and its subsidiary Hail First
Pharma has agreed to provide additional
funding to facilitate the completion
of the animal studies and
ongoing operational expenses in the amount
of $1.2 million in (three
installments
of $400,000 each dated March 21, April 21 and May
21,
2011
). As an accommodation, AI-Dorra/Hail First Pharma has
agreed to postpone the closing
of the buy-out offer and keep the
offer open until the end
of the 2nd Quarter, 2011.
The agreement was signed by Arella for Spencer and by Amyot as a representative
of Al-Dorra
and Hail First
Pharma.
75. On March 16,2011 at 9:24a.m.,
Market Wire carried a press release from Spencer
announcing that it had requested an extension
of the closing date for the acquisition by Al-Dorra:
Spencer Pharmaceutical Inc. has requested an extension to the closing
of the buy-out offer to finalize and release the independent animal
research analysis to shareholders and stakeholders.
The Company is pleased to report that Al-Dorra and its subsidiary
Hail First
Pharma have agreed to provide additional funding to
facilitate the completion
of the animal studies and ongoing
operational expenses in the amount
of $1.2 million. As an
accommodation, Al-Dorra/Hail First
Pharma have agreed to postpone
the closing
of the buy-out offer and keep the offer open until the end
of the 2nd Quarter, 2011.
26

In further news, the holders of an additional One-hundred and three
million ( 1
03,000,000) shares
of common stock have agreed to tender
their common stock in favor
of the Al-Dorra buy-out and its
subsidiary Hail First
Pharma. This represents, in addition to
management's shares already committed, an aggregate
of over 55% of
the issued and outstanding shares in the Company.
"Spencer Pharmaceutical has an obligation to provide full and fair
disclosure in effecting a securities transaction and requires the
additional time to fulfill this
requirement," stated Dr. Max Arella,
President and CEO
of Spencer Pharmaceutical Inc. Furthermore,
"We would like to thank the continued support of AI Dorra and Hail
First
Pharm in our mutual efforts to bring this transaction to a
successful
conclusion!" added Dr. Arella.
At
10:47 a.m.,
Market Wire carried a similar press release purportedly from Hail First Pharma.
76. There was little news about the purported acquisition after March 16, 2011. In
September 2011, Spencer announced that negotiations between the parties had ceased. No
acquisition ever took place.
77. Between November 2,
2010
-when the pump-and-dump scheme began in earnest
with news about the purported buyout
offer-and April 18, 2011, Amyot' s Small Cap and Green
Funds sold approximately 36 million shares
of Spencer stock for total gross proceeds of more
than $5.8 million. During that period, there were more than thirty days when Amyot's trading in
Spencer stock accounted for more than
50% of the daily trading volume.
The Purported Buyout Offer Was Not Real
78. Amyot, Arella, and Morrice -and, by extension, the companies they controlled
collectively (Spencer) or individually (lAB Media and Hilbroy controlled by
Amyot)-knew or
were reckless
in not knowing that the purported buyout offer was not real.
27

79. According to several of its press releases, Spencer conducted due diligence about
Al-Dora. However, Arella and Morrice never confirmed that Al-Dora was a legitimate company.
They never spoke with anyone at the Russian finn that first approached them about the buyout.
They supposedly sent someone to visit Al-Dora's offices in Kuwait, but the individual did not
meet with any representatives
of Al-Dora, and the office building he identified does not actually
contain a business by that name.
80. Strategema Capital, the Swiss finn hired by Spencer to evaluate the buyout offer,
did not speak with anyone at Al-Dora and found nothing in the public domain to confirm the
existence
of Al-Dora.
81. Spencer's November 16, 2010 press release identified Al-Dora Holdings as
"a
Kuwaiti private investment company owned and managed by some of the Gulfs richest
families" and identified "His Excellency Dr. Bandar Al-Dhafiri" as its Chairman. Arella and
Morrice never met or spoke with Al-Dhafiri, and they obtained no evidence that the name refers
to a real person.
82. Spencer's November 16,2010 press release also identified "His Excellency
Hussein
Al-Awaid" as the CEO
of Al-Dora Holdings. Al-Awaid is a real person, but he is
simply a Kuwaiti-born Canadian citizen who is  vice president
of a Canadian immigration
company. Al-Awaid has had other business dealings with Amyot, who has described him at
times as being affiliated with Hilbroy.
83. The letter dated November
22,2010 in which Al-Dora supposedly offered to
provide the
$500,000 non-refundable deposit contains no return address, no letterhead, and no
28

other contact information, and the signature at the bottom of the letter is illegible and does not
contain any typed name.
84. The letter dated December 8,
201 0 and entitled "Conditions to Offer to Purchase
Agreement" did not originate with Al-Dora. Rather, an outside attorney hired by Spencer
provided Morrice with a blank template that Arella and/or Morrice filled in. The brief document
does not contain the level
of detail and evidence of due diligence to be expected in a multi-
million dollar transaction, and there are multiple spelling and grammatical errors. The document
provides only a post office box address for Al-Dora. The document was purportedly signed by
Bandar Al-Dhafiri for Al-Dora, but as noted above, Arella and Morrice never met Al-Dhafiri,
and they obtained no evidence that the name refers to a real person.
85. The
$500,000 non-refundable deposit that Spencer received on December 21,
2010 did not come from Al-Dora. Rather, Amyot caused Hilbroy to advance the $500,000 to
Spencer in exchange for 500,000 shares
of Spencer stock.
86. Spencer received two letters from Sterling purporting to guarantee that Al-Dora
had access to
$500 million. However, Amyot drafted the letter for his contact Schlosser to sign,
and the Sterling finn at the address shown on the letterhead is not an investment finn but rather a
chartered accountant business that has no knowledge
of the people or information mentioned in
the letters.
87. When Al-Dora's supposed subsidiary, Hail First Pharma, issued press releases,
the press releases were sometimes drafted by Amyot, and the company's contact information was
sometimes listed as Hilbroy.
88. Besides the circumstantial evidence set forth above, the purported acquisition
of
29

Spencer makes absolutely no business sense. On November 12, 2010, Spencer announced that
the buyer was prepared to pay $245 million for the company. Yet
just a week earlier, the
company's interim financial statement indicated that it had assets of$111,532, liabilities
of
$303,855, and a shareholders' deficit of more than $17 million. The interim statement also
indicated that
Spencer had no revenue and a net loss of$188,660 in the third quarter
of2010.
Further, an inquiry at the PTO would have revealed that the company's only supposed asset-the
U.S.
patent-had been denied by the PTO. It is  inconceivable that a "Kuwaiti private investment
company owned and managed by some
of the Gulfs richest families" would have offered to pay
$245 million for a fledgling company with no legitimate assets and no revenue. Also, the
acquisition was styled as a
"tender offer", but none
of the necessary paperwork for a real tender
offer was ever filed with the Commission, and public investors were never given instructions
about how to tender their shares.
FIRST CLAIM FOR RELIEF
(Violation of Sections 17(a)(l) and (3)
of the Securities Act by All Defendants)
89. The Commission repeats and incorporates by reference the allegations in
paragraphs 1-88 above.
90. Between June 2010 and March 2011, as set forth above, Spencer disseminated
numerous false and misleading press releases, first about supposed progress with its drug
delivery technology and then about a supposed buyout offer from a Mideast company that
wanted to pay $245 million for all
of its outstanding shares. These press releases were false and
misleading because
Spencer had no real drug delivery technology and because there was no real
buyout offer. Amyot wrote many
of the press releases, Arella was quoted in almost all of them,
30

Arella and Morrice worked with Amyot to create and disseminate them, often through Hilbroy,
lAB Media repeated many
of the false and misleading statements on its own website, and
Morrice reassured investors that the statements were true. In addition, while Spencer was issuing
the press releases, Amyot, Arella, Morrice, lAB Media, and Hilbroy were conducting a
promotional campaign using Internet websites and newsletters to tout Spencer's supposed
business activities and the buyout offer.
91. Defendants, directly and indirectly, acting intentionally, knowingly
or recklessly,
in the offer
or sale of securities by the use of the means or instruments of transportation or
communication in interstate commerce or by the use of the mails: have employed or are
employing devices, schemes
or artifices to defraud; or have engaged or are engaging in
transactions, practices or courses
of business which operate as a fraud or deceit upon purchasers
of the securities.
92. As a result, defendants have violated and, unless enjoined, will continue to violate
Sections 17(a)(l) and (3)
ofthe Securities Act [I 5 U.S.C. §§77q(a)(I ), (3)].
SECOND CLAIM FOR RELIEF
(Violation of Section lO(b) of the Exchange Act
and Rule 10b-5(a) and (c) by All Defendants)
93. The Commission repeats and incorporates by reference the allegations in
paragraphs I-91 above.
94. Between June
201 0 and March 20 II, as set forth above, Spencer disseminated
numerous false and misleading press releases, first about supposed progress with its drug
delivery technology and then about a supposed buyout offer from a Mideast company that
wanted to pay $245 million for all
of its outstanding shares. These press releases were false and
31

misleading because Spencer had no real drug delivery technology and because there was no real
buyout offer. Amyot wrote
many of the press releases, Arella was quoted in almost all of them,
Arella and Morrice worked with Amyot
to create and disseminate them, often through Hilbroy,
lAB Media repeated many of the false and misleading statements on its own website, and
Morrice reassured investors that the statements were true. In addition, while Spencer was issuing
the press releases, Amyot, Arella, Morrice, lAB Media, and Hilbroy were conducting a
promotional campaign using Internet websites
and newsletters to tout Spencer's supposed
business activities
and the buyout offer.
95. Defendants, directly or indirectly, acting intentionally, knowingly or recklessly,
by the use of means or instrumentalities of interstate commerce or of the mails, in connection
with the purchase or sale of securities: have employed or are employing devices, schemes or
artifices
to defraud; or have engaged or are engaging in acts, practices or courses of business
which operate
as a fraud or deceit upon certain persons.
96. As a result, defendants have violated and, unless enjoined, will continue to violate
Section
IO(b) of the Exchange Act [15 U.S.C. §78j(b)] and Rule 10b-5(a) and (c) [17 C.F.R.
§§240.10b-5(a}, (c)].
THIRD CLAIM FOR RELIEF
(Violation of Section 17(a)(2) of the Securities Act by
Spencer, Amyot, Arella, and Morrice)
97. The Commission repeats and incorporates by reference the allegations in
paragraphs 1-96 above.
98. Between June 2010 and March 2011, as set forth above, Spencer disseminated
numerous
false and misleading press releases, first about supposed progress with its drug
32

delivery technology and then about a supposed buyout offer from a Mideast company that
wanted to pay $245 million for all
of its outstanding shares. These press releases were false and
misleading because
Spencer had no real drug delivery technology and because there was no real
buyout offer. Amyot wrote many
of the press releases, Arella was quoted in almost all of them,
Arella and Morrice worked with Amyot to create and disseminate them, and Morrice reassured
investors that the statements were true.
99. Defendants
Spencer, Amyot, Arella, and Morrice, directly and indirectly, acting
intentionally, knowingly
or recklessly, in the offer or sale of securities by the use of the means or
instruments of transportation or communication in interstate commerce or by the use of the
mails: have obtained
or are obtaining money or property by means of untrue statements of
material fact or omissions to state a material fact necessary in order to make the statements
made, in the light
of the circumstances under which they were made, not misleading.
100. As a result, defendants Spencer, Amyot, Arella, and Morrice have violated and,
unless enjoined, will continue to violate
Section 17(a)(2)
of the Securities Act [15 U.S.C.
§77q(a)(2)].
FOURTH CLAIM FOR RELIEF
(Violation of Section lO(b) of the Exchange Act and Rule l0b-5(b) by
Spencer, Amyot, Arella, and Morrice)
101. The Commission repeats and incorporates by reference the allegations in
paragraphs
1-100 above.
102. Between June 2010 and March 2011, as set forth above, Spencer disseminated
numerous false and misleading press releases, first about supposed progress with its drug
delivery technology and then about a supposed buyout offer from a  Mideast company that
33

wanted to pay $245 million for all of its outstanding shares. These press releases were false and
misleading because Spencer had no real drug delivery technology and because there was no real
buyout offer. Amyot wrote many
of the press releases, Arella was quoted in almost all of them,
Arella and Morrice worked with Amyot to create and disseminate them, and Morrice reassured
investors that the statements were true.
103. Defendants Spencer, Amyot, Arella, and Morrice, directly
or indirectly, acting
intentionally, knowingly or recklessly, by the use
of means or instrumentalities of interstate
commerce
or of the mails, in connection with the purchase or sale of securities: have made or
are making untrue statements of material fact or have omitted or are omitting to state a material
fact necessary to make the statements made, in the light of the circumstances under which they
were made, not misleading.
104. As a result, defendants Spencer, Amyot, Arella, and Morrice have violated and,
unless enjoined, will continue to violate Section
10(b)
of the Exchange Act [15 U.S.C. §78j(b)]
and Rule 10b-5(b) [17 C.F.R. §240.10b-5(b)].
FIFTH CLAIM FOR RELIEF
(Aiding and Abetting Spencer's Violations of
Section 17(a) of the Securities Act by
Arella, Morrice, lAB Media, and Hilbroy)
105. The Commission repeats and incorporates by reference the allegations in
paragraphs
1-1 04 above.
1
06. As set forth above, defendant Spencer, directly and indirectly, acting
intentionally, knowingly or recklessly, in the offer
or sale of securities by the use of the means or
instruments of transportation or communication in interstate commerce or by the use of the
34

mails: (a) has employed or is employing devices, schemes or artifices to defraud; (b) has
obtained
or is obtaining money or property by means of untrue statements of material fact or
omissions to state a material fact necessary in order to make the statements made, in the light of
the circumstances under which they were made, not misleading; or (c) has engaged or is
engaging in transactions, practices
or courses of business which operate as a fraud or deceit upon
purchasers
of the securities. As a result, Spencer has violated and, unless enjoined, will continue
to violate Section 17(a)
of the Securities Act [15 U.S.C. §77q(a)].
107. Defendants Arella, Morrice, lAB Media, and Hilbroy each knowingly
or
recklessly provided substantial assistance to defendant Spencer's violations of Section 17(a) of
the Securities Act.
108. As a result, defendants Arella, Morrice, lAB Media, and Hilbroy each aided and
abetted Spencer's violations
of Section 17(a) of the Securities Act (15 U.S.C. §77q(a)].
SIXTH CLAIM FOR RELIEF
(Aiding
and Abetting Spencer's Violations of
Section lO(b) ofthe Exchange Act and Rule lOb-5 by
Arella. Morrice, lAB Media, and Hilbroy)
109. The Commission repeats and incorporates by reference the allegations in
paragraphs
1-1 08 above.
110. As set forth above, defendant Spencer, directly or indirectly, acting intentionally,
knowingly or recklessly, by the use
of means or instrumentalities of interstate commerce or of
the mails, in connection with the purchase or sale of securities: (a) has employed or is
employing devices, schemes or artifices to defraud; (b) has made
or is making untrue statements
of material fact or have omitted or are omitting to state a material fact necessary to make the
35

statements made, in the light of the circumstances under which they were made, not misleading;
or (c) has engaged or is engaging in
acts, practices or courses of business which operate as a
fraud or deceit upon certain persons. As a result, defendant
Spencer has violated and, unless
enjoined,
will continue to violate Section lO(b)
of the Exchange Act and Rule 10b-5.
111. Defendants Arella, Morrice, lAB Media, and Hilbroy each knowingly
or
recklessly provided substantial assistance to defendant Spencer's violations of Section lO(b) of
the Exchange Act and Rule 1 Ob-5(b ).
112. As a result, defendants Arella, Morrice, lAB Media, and Hilbroy each aided and
abetted
Spencer's violations
of Section IO(b) of the Exchange Act [15 U.S.C. §78j(b)] and
Rule
IOb-5.
SEVENTH CLAIM FOR RELIEF
(Amyot's Control
Person Liability
for Spencer's Violations of
Section lO(b) of the Exchange Act and Rule lOb-5)
113. The Commission repeats and incorporates by reference the allegations in
paragraphs 1-112 above.
114. As set forth above, defendant
Spencer, directly or indirectly, acting intentionally,
knowingly
or recklessly, by the use of means or instrumentalities of interstate commerce or of
the mails, in connection with the purchase or sale of securities: (a) has employed or is
employing devices, schemes or artifices to defraud; (b) has made
or is making untrue statements
of material fact or have omitted or are omitting to state a material fact necessary to make the
statements made, in the light
of the circumstances under which they were made, not misleading;
or (c) has engaged
or is engaging in acts, practices or courses of business which operate as a
36

fraud or deceit upon certain persons. As a result, defendant Spencer has violated and, unless
enjoined, will continue to violate Section IO(b)
of the Exchange Act and Rule 10b-5.
115.
As an officer and director of Spencer until November 2009 and the person who
orchestrated the promotional campaign for Spencer and drafted many
of its press releases,
defendant Amyot exercised control over the public statements and other activities
of Spencer that
resulted in its violations
of Section IO(b) ofthe Exchange Act and Rule IOb-5.
116. By reason
of the foregoing, defendant Amyot is liable as a control person under
Section
20(a)
of the Exchange Act [15 U.S.C. §78t(a)] for Spencer's violations of Section 10(b)
of the Exchange Act [15 U.S.C. § 78j(b)] and Rule IOb-5 thereunder [17 C.F.R. § 240.10b-5].
EIGHTH CLAIM FOR RELIEF
(Violation of Sections S(a) and (c) of the Securities Act by
Defendants Spencer, Amyot, and Arella)
117. The Commission repeats and incorporates by reference the allegations in
paragraphs 1-116 above.
118.
On July 14, 2008, Finkelstein entered into a subscription agreement with
Wolverine, which was
"to be renamed Spencer Pharmaceutical Inc.," whereby Finkelstein agreed
to pay
$110,000 for 22 million shares
of stock. Amyot controlled both companies at the time of
the transaction. There is no evidence that Finkelstein ever paid the $110,000. Arella's signature
appears on the document
on behalf of Spencer, even though he did not become president of the
company until June
2009, suggesting that the agreement may have been back-dated.
119. In November
2009, an attorney issued an opinion letter for Spencer stating that, as
of July 14, 2009, the requirements of Rule 144 of the Securities Act had been met regarding
Finkelstein's 22 million Spencer shares and so the restrictive legend could be lifted. The
37

attorney concluded, among other things, that Finkelstein was not an affiliate of Spencer and that
the shares had been held for a year based on the July 14, 2008 date of the subscription
agreement.
The factual predicates for the attorney's opinion were incorrect, as Amyot's control
of both Spencer and Finkelstein meant that Finkelstein was an affiliate of Spencer, and the
subscription agreement
may have been backdated.
120. On January 12, 2010, Spencer asked its transfer agent to issue 22 million
unrestricted shares
to Finkelstein. The shares were to be sent to Hilbroy on Finkelstein's behalf.
121. On or about January 20, 2010, Spencer's transfer agent sent Finkelstein's stock
certificate
to a Swiss bank. The documentation for the transfer was signed by Amyot.
122. On March 24,2010, Finkelstein sold 12 million shares to Tillerman for $25,000.
On April16, 2010, shares were deposited into the account of Amyot's Small Cap Fund.
123. No registration statement was ever filed for the 22 million shares that Finkelstein
received,
and no exemption from registration was available.
124. Spencer, Amyot, and Arella orchestrated the movement of 12 million unrestricted
Spencer shares
from Spencer through Finkelstein, then through the Swiss bank, and then to
Amyot's Small Cap Fund at Tillerman. This share movement evaded the registration
requirements
of the Securities Act.
125. Spencer, Amyot, and Arella, directly or indirectly: (a) have made or are making
use of the means or instruments of transportation or communication in interstate commerce or of
the mails to sell, through the use or medium of a prospectus or otherwise, securities as to which
no registration statement has been in effect and for which no exemption from registration has
been available; and/or (b) have made or are making use of the means or instruments of
38

transportation or communication in interstate commerce or of the mails to offer to sell, through
the use or medium
of a prospectus or otherwise, securities as to which no registration statement
has been filed and for which no exemption from registration has been available.
126. As a result, Spencer, Amyot, and Arella have violated and, unless enjoined, will
continue to violate Sections 5(a) and (c)
of the Securities Act [15 U.S.C. §§77e(a), (c)].
PRAYER FOR RELIEF
WHEREFORE, the Commission requests that this Court:
A. Enter a permanent injunction restraining the defendants, and each of their agents,
servants, employees, and attorneys and those persons in active concert
or participation with them
who receive actual notice
of the injunction by personal service or otherwise, including facsimile
transmission
or overnight delivery service, from directly or indirectly engaging in the conduct
described above,
or in conduct of similar purport and effect, in violation of:
1. Sections 17(a) of the Securities Act [15 U.S.C. §77q(a)]; and
2.
Section 10(b)
of the Exchange Act [15 U.S.C. §78j(b)] and Rule lOb-5
thereunder [17 C.F.R. §240.10b-5];
B. Enter a permanent injunction restraining defendants Spencer, Amyot, and Arella,
and each
of their agents, servants, employees, and attorneys and those persons in active concert
or participation with them who receive actual notice
of the injunction by personal service or
otherwise, including facsimile transmission or overnight delivery service, from directly or
indirectly engaging in the conduct described above, or in conduct of similar purport and effect, in
violation
of Sections 5(a) and (c) of the Securities Act [15 U.S.C. §§77e(a), (c)];
39

C. Require the defendants to disgorge their ill-gotte n gains, plus pre-judgment
interest;
D. Order the defendants to pay appropriate  civil penalties pursuant to Section 20(d)
ofthe Securities Act [15 U.S.C. §77t(d)] and Section 2l(d)(3) of the Exchange Act [15 U.S.C.
§78u(d)(3)];
E. Enter an order, pursuant to Section 2 1(d)(2) of the Exchange Act [15 U.S.C.
§78u( d)(2)], barring Amyot, Arella, and Morrice from serving as an officer
or director of any
issuer required to
file reports with the Commission pursuant to Sections 12(b ),  12(g) or 15( d) of
the Exchange Act [15 U.S.C. §§78l(b), 78l(g), 78o(d)];
F. Enter
an order, pursuant to Section 20(g) of the Securities Act [ 15 U .S .C. §77t(g)]
and Section 2 1(d)(
6)(8) of the Exchange Act [ 15 U.S.C. §78u(d)(6)(B)], barring Amyot, Arella,
and Morrice  from participating in
an offering of a  penny stock, as defined in Section 3(a)(51) of
the Exchange Act [15 U.S.C. §78c(a)(51)];
G. Retain jurisdiction over this action to implement a
nd carry out the terms of all
orders and decrees that may be entered; and
H. A ward such other and further relief as the Court deems just and proper.
Respectfully submitted,
M!~£
1
i~7550)
Regional Trial Counsel
Frank C. Huntington (Mass. Bar No. 544045)
Senior
Trial Counsel
Amy Gwiazda (Mass. Bar No. 663494)
Senior Enforcement Counsel
James R. Drabick (Mass. Bar No. 667460)
E nforcement
Coun
sel
40

Dated: December 17,2012
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
33 Arch Street, 23rd Floor
Boston, MA 02110
(617) 573-8960 (Huntington direct)
(617) 573-4590 (fax)
[email protected] (Huntington email)
41

Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 1 of 41

UNITED STATES DISTRICT COURT 
DISTRICT OF MASSACHUSETTS 

) 
SECURITIES AND EXCHANGE COMMISSION, ) 

Plaintiff, 

v. 

SPENCER PHARMACEUTICAL INC., 
JEAN-FRAN<;OIS AMYOT, 
MAXIMILIEN ARELLA, 
IAN MORRICE, 
lAB MEDIA INC. and 
HILBROY ADVISORY INC., 

Defendants. 

) 
) 
) 
) 
) 
) 
) 
) 
) 
) 
) 
) 
) 

Case No. 

JURY TRIAL DEMANDED 

COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF 

Plaintiff Securities and Exchange Commission (''the Commission") alleges the following 

against defendants Spencer Pharmaceutical Inc. ("Spencer"), Jean-Fran~ois Amyot ("Amyot"), 

Maximilien Arella ("Arella"), Ian Morrice ("Morrice"), lAB Media Inc. ("lAB Media"), and 

Hilbroy Advisory Inc. ("Hilbroy"): 

PRELIMINARY STATEMENT 

1. This enforcement action concerns a "pump-and-dump" scheme whereby 

defendants artificially "pumped" up the price of a publicly-traded company through the 

dissemination of false positive information about the company, after which they "dumped" the 

stock into the marketplace to take advantage of the artificially high stock price. The scheme in 

this case involved Spencer, a purported pharmaceutical company with addresses in Boston, 

Massachusetts, and in Canada. The scheme was orchestrated by Amyot, who was an officer of 



Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 2 of 41

Spencer until November 2009 and then continued to exercise control over the affairs of the 

company. Amyot was assisted by Arella and Morrice, who became officers and directors of 

Spencer in November 2009, and together they effected the "pump" of Spencer's stock price by 

disseminating false information about Spencer through two public relations companies that 

Amyot controlled (lAB Media and Hilbroy). 

2. The "pump-and-dump" started in June 2010 and accelerated in November 2010, 

when Spencer began issuing a string of false and misleading press releases claiming that it had 

received an unsolicited buyout offer from a Mideast company. Arella and Morrice worked with 

Amyot to create and disseminate the misleading press releases. While Spencer was issuing the 

press releases, Amyot, Arella, Morrice, lAB Media, and Hilbroy were conducting a promotional 

campaign using internet websites and newsletters to tout Spencer and the buyout offer. When 

Spencer announced on November 11, 2010 that the Mideast company proposed to pay $0.97 per 

share- or $245 million- for the company, the price of Spencer stock more than doubled in two 

days - opening at $0.25 per share on November 1 0 and closing at $0.60 per share on 

November 12. The daily trading volume skyrocketed as well, reaching almost six million shares 

traded on November 11, 2010, compared to a daily average ofless than 50,000 shares during the 

previous three months. 

3. The proposed buyout offer was pure fiction, but Amyot's profits from dumping 

Spencer stock were very real. Between November I, 2010 and April 18, 2011, Amyot sold 

approximately 36 million Spencer shares for gross proceeds of more than $5.8 million. Amyot 

and Arella also orchestrated the deposit of 12 million Spencer shares into an account controlled 

by Amyot through a series of transfers done to evade restrictions and securities registration 

2 



Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 3 of 41

requirements. 

4. Through the activities alleged in this Complaint, (1) all the defendants engaged in: 

(a) fraud in the offer or sale of securities, in violation of Section 17(a)(l) and (3) of the Securities 

Act of 1933 ("Securities Act"), and (b) fraudulent or deceptive conduct in connection with the 

purchase or sale of securities, in violation of Section lO(b) of the Securities Exchange Act of 

1934 ("Exchange Act") and Rules 10b-5(a) and (c) thereunder; (2) Spencer, Amyot, Arella and 

Morrice engaged in: (a) fraud in the offer or sale of securities, in violation of Section 17(a)(2) of 

the Securities Act, and (b) fraudulent or deceptive conduct in connection with the purchase or 

sale of securities, in violation of Section lO(b) of the Exchange Act and Rule 10b-5(b) 

thereunder; (3) Arella, Morrice, lAB Media, and Hilbroy aided and abetted Spencer's violations 

of Section 17(a) of the Securities Act, Section IO(b) of the Exchange Act, and Rule IOb-5; 

(4) Amyot had control person liability for Spencer's violations of Section IO(b) of the Exchange 

Act, and Rule IOb-5; and (5) Spencer, Amyot, and Arella engaged in the sale of unregistered 

securities in violation of Sections 5(a) and 5(c) of the Securities Act. 

5. Accordingly, the Commission seeks: (a) a permanent injunction prohibiting the 

defendants from further violations of the relevant provisions of the federal securities laws; 

(b) disgorgement of the defendants' ill-gotten gains, plus pre-judgment interest; (c) the 

imposition of civil penalties due to the egregious nature of the defendants' violations; (d) an 

order barring Amyot, Arella, and Morrice from serving as an officer or director of a public 

company; and (e) an order barring Amyot, Arella, and Morrice from participating in an offering 

of a "penny stock" as defined in Section 3(a)(51) ofthe Exchange Act. 

3 



Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 4 of 41

JURISDICTION 

6. The Commission seeks a permanent injunction and disgorgement as to all 

defendants pursuant to Section 20(b) of the Securities Act [15 U.S.C. §77t(b)] and Section 

21(d)(l) of the Exchange Act. The Commission seeks civil penalties as to all defendants 

pursuant to Section 20(d) of the Securities Act [15 U.S.C. §77t(d)] and Section 21(d)(3) of the 

Exchange Act [15 U.S.C. §78u(d)(3)]. The Commission seeks an officer/director bar as to 

defendants Amyot, Arella, and Morrice pursuant to Section 21(d)(2) of the Exchange Act 

[15 U.S.C. §78u(d)(2)]. The Commission seeks a penny stock bar as to defendants Amyot, 

Arella, and Morrice pursuant to Section 20(g) of the Securities Act [15 U.S.C. §77t(g)] and 

Section 21(d)(6)(B) of the Exchange Act [15 U.S.C. §78u(d)(6)(B)]. 

7. This Court has jurisdiction over this action pursuant to Sections 20(d) and 22(a) 

of the Securities Act [15 U.S.C. §§77t(d), 77v(a)] and Sections 21(d), 21(e) and 27 of the 

Exchange Act [15 U.S.C. §§78u(d), 78u(e), 78aa]. Venue is proper in this District because, at all 

relevant times, Spencer maintained an office in Boston. 

8. In connection with the conduct described in this Complaint, the defendants 

directly or indirectly made use of the mails or the means or instruments of transportation or 

communication in interstate commerce. 

9. The defendants' conduct involved fraud, deceit, or deliberate or reckless disregard 

of regulatory requirements, and resulted in substantial loss, or significant risk of substantial loss, 

to other persons. 

4 



Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 5 of 41

DEFENDANTS 

10. Spencer is a Delaware corporation that purports to be a phannaceutical company 

based in Boston, Massachusetts, with a presence in Canada as well. At all relevant times, its 

common stock was traded under the symbol "SPPH" on OTC Link (formerly, "the Pink Sheets") 

operated by OTC Markets Group Inc. At all relevant times, its common stock was a "penny 

stock" as that term is defined in Section 3(a)(51) of the Exchange Act [15 U.S.C. §78c(a)(51)]. 

11. Amyot, age 40, formerly lived in Quebec, Canada, but may recently have moved 

to the Bahamas. He was an officer and director of Spencer until November 2009. 

12. Arella, age 56, lives in Montreal, Canada. He became president, chief executive 

officer, and a director of Spencer in November 2009. 

13. Morrice, age 52, lives in Ottawa, Canada. He became executive vice president, 

corporate secretary, and a director of Spencer in November 2009. 

14. lAB Media is a Canadian corporation controlled by Amyot. lAB Media 

describes itself as a "financial advertising and consulting firm" for small-cap companies. lAB 

Media had a contract to provide public relations services to Spencer. 

15. Hilbroy is a Canadian corporation controlled by Amyot. Hilbroy describes itself 

as an "advisory and consultancy company". Hilbroy shares an address with lAB Media, and it 

assisted lAB Media in its public relations activities on behalf of Spencer. 

5 



Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 6 of 41

STATEMENT OF FACTS 

The Origin of Spencer 

16. In 1998, Cortez Development Ltd. was incorporated in Delaware. By 2008, after 

several name changes, the company was known as Emergensys Corp. ("Emergensys,), and 

Amyot was its president. 

17. In February 2008, Wolverine Oil and Gas Corp. ("Wolverine,') was incorporated 

in Nevada, and Amyot was its only director. 

18. On May 27,2009, Amyot filed an amendment to change Wolverine's name to 

Spencer Pharmaceutical Inc. ("Spencer"). 

19. On June 23, 2009, Amyot caused Emergensys to enter into a reverse merger with 

the newly-renamed Spencer. 

20. On July 13, 2009, Emergensys announced that it had entered into the reverse 

merger and that it was going to change its own name to Spencer. 

21. On November 16, 2009, Amyot resigned as vice president of Spencer, and Arella 

became a director and was appointed president and CEO. 

22. On November 22, 2009, Amyot resigned as a director of Spencer, and Morrice 

became a director and was appointed executive vice president and secretary. 

23. Although he ceased to be an officer or director of Spencer after November 2009, 

Amyot continued to exert control over the company's affairs. 

Spencer's Purported Business Activities and Financial Condition 

24. On August 10, 2009, Spencer entered into an "exclusive patent license 

agreement" with 4413261 Canada Inc., a Canadian company that claimed to have the exclusive 

6 



Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 7 of 41

right to market U.S. Patent 2007/0077305-A1, which concerns methods to accelerate the hwnan 

body's absorption of certain drugs. Arella and Morrice signed the agreement for both Spencer 

and 4413261 Canada Inc. 

25. In reality, U.S. Patent 2007/0077305-Al had not been approved. One of the 

scientists listed on Spencer's Scientific Advisory Board applied for patent 2007/0077305-Al, but 

the U.S. Patent and Trademark Office ("PTO") denied the application. 

26. On November 2, 2009, Spencer entered into a research contract with certain 

scientists at the Universite du Quebec a Montreal ("the UQAM"), ostensibly to develop the 

technology covered by Patent 2007/0077305-A1. The contract required Spencer to pay a total of 

$300,000 to the UQAM in six installments between November 2009 and May 2011. Arella 

signed the contract for Spencer. 

27. On December 22, 2009, Amyot caused Hilbroy to loan $50,000 to Spencer, which 

used the money for the first required payment to the UQAM. 

28. On February 10,2010, a chartered accountant in Montreal released audited 2009 

financial statements for Spencer. The balance sheet indicated that Spencer had assets of$57,600 

(supposedly related to the patent), liabilities of$57,600 (primarily the $50,000 loan from 

Hilbroy), and a "shareholders' deficit" of more than $17 million (meaning that investors had 

supposedly put more than $17 million into the company without receiving a return, although 

there is no evidence that Spencer had ever received the money). The earnings statement 

indicated that Spencer had no revenue in 2009. 

29. On April22, 2010, Amyot caused Hilbroy to loan $50,000 to Spencer, which used 

the money for the next required payment to the UQAM. 

7 



Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 8 of 41

30. On May 8, 201 0, the chartered accountant released an interim financial statement 

for Spencer for the first quarter of201 0. The interim statement indicated that Spencer's financial 

condition had barely changed since the audited 2009 financial statements prepared in February 

2010. The interim statement also indicated that Spencer had no revenue and no operating 

expenses in the first quarter of2010. 

31. On May 11, 2010, Amyot caused Hilbroy to loan $50,000 to Spencer, which used 

the money for the next required payment to the UQAM. 

32. On August 20, 2010, the chartered accountant released an interim financial 

statement for Spencer for the second quarter of2010. The interim statement indicated that 

Spencer had assets of $108,028 (supposedly related to the patent), liabilities of $217,050 

(accounts payable, accruals, and loans from an "affiliated company"- i.e., Hilbroy), and a 

purported shareholders' deficit of more than $17 million. The interim statement also indicated 

that Spencer had no revenue and a net loss of $112,892 in the second quarter of 2010. 

33. On October 13,2010, Amyot caused Hilbroy to loan $50,000 to Spencer, which 

used the money to make the next required payment to the UQAM. 

34. On November 3, 2010, the chartered accountant released an interim financial 

statement for Spencer for the third quarter of2010. The interim statement indicated that Spencer 

had assets of$111,532 (supposedly related to the patent), liabilities of$303,855 (accounts 

payable, accruals, and loans from an "affiliated company"- i.e., Hilbroy), and a purported 

shareholders' deficit of more than $17 million. The interim statement also indicated that Spencer 

had no revenue and a net loss of $188,660 in the third quarter of 2010. 

8 



Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 9 of 41

Issuance of Spencer Common Stock 

35. On November 22,2009, Spencer entered into a letter agreement with Morrice 

whereby Morrice would receive $1 0,000 per month as executive vice president and $2,000 per 

month as a director. In addition, a company controlled by Morrice received 2.5 million shares of 

Spencer common stock as a signing bonus. 

36. On November 26, 2009, the Spencer Board of Directors approved the issuance of 

209 million shares of common stock. The recipients included: 

Arella- 36 million shares; 

Hilbroy - 24 million shares; 

Cunningham-Adams Small Cap Fund ("Small Cap Fund"), an investment 
fund controlled by Amyot- 23 million shares; and 

Finkelstein Capital ("Finkelstein"), a Canadian corporation ostensibly 
owned by Amyot's brother but actually controlled by Amyot- 22 million 
shares. 

None of the recipients had made investments in Spencer that would have justified the issuance of 

millions of shares of the company's stock. 

The Beginning of the "Pump and Dump" Scheme 

37. As of2009, Amyot had the practice of taking control of small, micro-cap 

companies, using lAB Media and Hilbroy to promote the companies in order to boost the stock 

price, and then selling his stake in the companies for a profit. 

38. On December 10, 2009, Spencer and lAB Media entered into a "securities 

awareness agreement" whereby lAB Media agreed to prepare press releases, arrange for 

publicity on the internet, and prepare research reports on Spencer in exchange for 24 million 

9 



Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 10 of 41

shares of common stock. The agreement was signed by Arella for Spencer and by Amyot for 

lAB Media. 

39. On March 8, 2010, Spencer filed an Initial Company Information and Disclosure 

Statement with the OTC, a document required for its listing on OTC Links. The Disclosure 

Statement, which Arella signed as President and CEO, described the company in glowing terms: 

The Company is a newly formed company specializing in a controlled 
release of existing therapeutics molecules in order to potentially 
increase their bio-availability and systemic efficacy in the challenging 
area of drugs delivered to the Central Nervous System through an 
innovative approach that allows the crossing of the blood-brain barrier 
and potentially reduce the side effects of drugs used for neurological 
diseases and brain cancer .... 

[The company is] a multi-disciplinary company which develops 
products from patented drug platform technologies which deliver 
drugs more efficiently to the body. Specifically these drugs are for 
the treatment of Neurological diseases such as Alzheimer/Parkinson 
and Brain Cancer as well as patented slow release drug delivery 
technology for the treatment oftype-2 diabetes/arthritis and other 
potential applications. 

Spencer Pharmaceutical offers a wide range of drug delivery 
platforms designed on the impact target markets based on both 
demographics and geographic_al trends. 

Those statements were false and misleading. In reality, Spencer had no business activities apart 

from the single contract to fund research at the UQAM- research supposedly related to a U.S. 

patent that, in fact, had been denied by the PTO. 

40. The Disclosure Statement also indicated that Spencer's "head office" and 

"administrative and legal offices" were located at 8 Faneuil Hall in Boston. That statement was 

false and misleading. In reality, the Boston address was merely a "virtual office" that answered 

10 



Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 11 of 41

phone calls and forwarded mail. Amyot signed the contract for the "virtual office", made the 

payments, and directed that all of Spencer's mail should be forwarded to him at Hilbroy. 

41. Beginning in June 2010, the defendants began a coordinated promotional 

campaign to tout Spencer and its stock that had three components. 

a. Spencer issued press releases about purported developments in its 

business. Amyot drafted many of the press releases and often sent them to Arella and Morrice 

with instructions about when to release them. Arella or Morrice were listed as contacts for the 

company. 

b. lAB Media posted articles about Spencer on its own website called 

"ItsAIIBull.net". Most of the stories commented favorably on the company's recent press 

releases and encouraged investors to buy Spencer stock soon before the price started rising. The 

website's fine print disclosed that lAB Media had been compensated with 24,000,000 shares of 

Spencer stock. 

c. lAB Media, Hilbroy, and the Small Cap Fund, all controlled by Amyot, 

paid companies operating internet websites devoted to micro-cap stocks to carry reports and 

other publicity about Spencer, and paid other companies to distribute publicity about Spencer to 

their lists of email contacts. The companies receiving these payments included Alpha Trade, 

Blue Wave Advisers, Cream Consulting, Diamond Class Consulting, DMS Consulting, 

eMarketer, First Alert Financial, Guidance Marketing, International Ventures Capital, Mass 

Financial Group, MVP Advisors, Nebula Stocks, OTC Picks, Penny Payday, Sherwood 

Ventures, SmallCapVoice.com, SpeculatingStocks.com, StockRollandRoll, TST Advisors, VNC 

Associates, and WFWS. 

11 



Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 12 of 41

42. The promotional campaign was based upon false and misleading statements about 

Spencer's business activities. On many days when Spencer issued false and misleading public 

statements, Amyot sold Spencer stock through the Small Cap fund and through the Cunningham-

Adams Green Fund ("Green Fund"), another investment fund that he controlled. 

43. On June 22,2010, a public news outlet called PinkSheets carried a press release 

from Spencer stating that Arella had just been named its president. Arella was quoted as saying: 

I am delighted to have the opportunity to work with a company that is 
breaking new frontiers with innovative drug release and absorption 
systems for the treatment of metabolic diseases. 

Those statements were false and misleading, because Arella had been president of Spencer since 

November 2009 and, more importantly, because Spencer did not own any "innovative drug 

release and absorption systems for the treatment of metabolic diseases" (although some of the 

QAMF researchers it was funding were involved in that area). 

44. On August 24,2010 at 6:30a.m., a public news outlet called Market Wire carried 

a press release from Spencer announcing favorable results for its purported drug delivery 

technology. At 8:03a.m., lAB Media's website posted a positive comment about Spencer's 

news: 

SPPH released some important news this morning and we think it 
could draw some serious investor interest. It seems they are seeing 
significant traction with their drug delivery technology, so we think 
we could see the trading action in SPPH heat up today as a result. 

At 1: 16 p.m., lAB Media posted a second positive comment: 

Investors are responding favorably to the news released this morning 
about SPPH's success in taking its drug delivery technology for 
Metform, an important diabetes treatment drug... Keep a close watch 
on SPPH because as more company developments come in, and more 

12 



Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 13 of 41

investors wake up to the story, we could see more sharp moves to the 
upside! 

Those statements were false and misleading, because Spencer had no drug delivery technology. 

The price of Spencer stock closed that day at $0.25 per share -up 32% from its closing price on 

the prior trading day. The volume of shares traded soared from 5,000 shares on August 23 to 

nearly 190,000 shares on August 24. 

45. On August 26, 2010 at 6:30a.m., Market Wire carried a press release from 

Spencer announcing the "competitive advantages" of its purported drug delivery technology, 

which "represents a major advancement in oral peptide or protein delivery." At 7:35a.m., lAB 

Media's website posted a positive comment about Spencer's news: 

SPPH had another AMAZING day yesterday as we rallied another 
20% to close at $0.30. Our readers are now up a whopping 50% from 
our initial mention of SPPH when it was trading $0.20. 
Congratulations to all those who jumped in and are now sitting pretty 
on top of some tidy profits! Volume was light in yesterday's session 
but we think that will change when investors get wind oftoday's PR. 

Those statements were false and misleading, because Spencer had no drug delivery technology. 

The price of Spencer stock closed that day at $0.32 per share- up 7% from its closing price on 

the prior trading day. 

46. On August 30,2010 at 6:30a.m., MarketWire carried a press release from 

Spencer announcing that it had added a certain medical researcher to its Scientific Advisory 

Board. At 7:35a.m., lAB Media's website posted a positive comment about Spencer's news: 

Since we broke through resistance on SPPH at the $0.25 level, we've 
been marching slowly, but steadily higher. Closing at $0.35 on 
Friday, we're now up a very respectable 75% since we alerted our 
readers to the name, but we think there could still be substantial 
upside remaining as more and more investors come around the SPPH 

13 



Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 14 of 41

story. Today we got another press release from SPPH which tells us 
that there are some serious scientific minds behind the company. 

During the day, Amyot's Small Cap Fund sold 107,833 shares of Spencer stock (45% of the 

day's trading volume) for gross proceeds of$35,529. 

47. On September 1, 2010 at 6:30a.m., MarketWire carried a press release from 

Spencer announcing that it was expanding its "patent protection to address the growing epidemic 

in diabetes globally." At 8:05a.m., lAB Media's website posted a positive comment under the 

caption "More great news from SPPH this morning." Those statements were false and 

misleading, because Spencer had no valid patents. During the day, Amyot's Green Fund sold 

70,000 shares of Spencer stock (53% of the day's trading volume) for gross proceeds of$22,363. 

48. Spencer continued to issue press releases about its purported business activities 

during September and October 2010. 

49. On October 25, 2010 at 6:15a.m., Market Wire carried a press release from 

Spencer announcing that it had expanded its "licensing talks" with companies in the United 

States, Canada, and Europe. These statements were false and misleading, because Spencer was 

not engaged in licensing talks with any legitimate companies. During the day, Amyot's Small 

Cap Fund sold 88,100 shares of Spencer stock (46% of the day's trading volume) for gross 

proceeds of$24,921. 

50. From June through October 2010, the price of Spencer stock rose from below 

$0.20 per share to $0.30 per share. As of October 31,2010, Amyot controlled Spencer stock 

worth more than $3.2 million through accounts for the Small Cap and Green Funds located at 

Tillerman Securities in the Bahamas. 

14 



Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 15 of 41

The Pump-and-Dump Based on the Purported Buyout Offer 

51. In early November 2010, the pump-and-dump scheme entered a new and more 

aggressive phase when Spencer announced that it had received a $245 million buyout offer. 

Over the next several months, Spencer issued nearly twenty press releases concerning the 

purported buyout offer. Arella was often quoted in the press releases, and Arella or Morrice 

were listed as contacts for the company. Amyot drafted many of the press releases and 

orchestrated the promotional campaign, often giving instructions about when the press releases 

should be made public, while Arella and Morrice assisted in drafting the releases and in 

arranging for them to be issued to the public, often through Hilbroy. In addition, lAB Media and 

Hilbroy continued to pay companies operating internet websites devoted to micro-cap stocks to 

carry reports and other publicity about Spencer, and continued to pay other companies to 

distribute publicity about Spencer to their lists of email contacts. 

52. On November 1, 2010, Spencer purportedly received a letter from a Russian 

investment firm claiming to represent a company that wanted to acquire Spencer. At 1 0:00 a.m. 

the next day (November 2), Market Wire carried a press release from Spencer announcing that it 

had received a letter of interest concerning a potential acquisition: 

Spencer Pharmaceutical Inc. announced today that the company has 
received a letter of interest by a private equity fund for a proposed 
important investment in the shares of the company. 

According to the letter of interest, the private equity fund has 
requested its identity be kept confidential until further discussion and 
due diligence is undertaken. However, no price has yet to be 
discussed nor any formal offer made. 

"Although it is very flattering to be courted at this early stage, our 
objectives are clear and we will continue to work with our partners in 
licensing our technology for the Met4 as well as our extended release 

15 



Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 16 of 41

Ibuprofen," said Dr. Arella, President of Spencer Pharmaceutical Inc. 
"Naturally, if a formal offer was to be made by the private equity 
fund, the board of directors would consider, evaluate and recommend 
a course of action to its shareholders," further added Dr. Arella 

The final terms and conditions of the transaction will be determined in 
a definitive agreement. No assurances can be provided that a 
definitive agreement will be executed. Execution of a definitive 
agreement is subject to, among other things, confirming due diligence 
by Spencer and other conditions and approvals by both companies' 
management, board of directors and shareholders, as appropriate. 

During the day, Amyot's Small Cap Fund sold 57,300 shares of Spencer stock for gross proceeds 

of$15,681. 

53. On November 4, 2010 at II: I9 a.m., Market Wire carried a press release from 

Spencer announcing that it had received an "unsolicited all-cash offer": 

Spencer Pharmaceutical Inc. announced today that it has received an 
all-cash offer from a private equity firm. According to the company, 
a private equity firm has provided the board of directors with an all­
cash offer to acquire any and all shares of the company. The board of 
directors has agreed to keep the offer confidential until an investment 
bank can be mandated to review the offer, conduct an appropriate due 
diligence and recommend a course of action. 

"We are surprised to be receiving an all-cash offer at this stage, and in 
order to keep our shareholders informed, we have opted to announce 
the receipt of the offer yet until we can have an independent review of 
the offer we will remain quiet as to his details," said Dr. Arella, 
president of Spencer Pharmaceutical Inc. "We don't want to alarm 
our shareholders and/or put false hopes that a transaction is imminent 
so all we can do at this time is continue with the development of our 
licensing program and further development of our technology and 
business model to create sustainable shareholder value," further added 
Dr. Arella. 

The final terms and conditions of the transaction will be determined in 
a definitive agreement. No assurances can be provided that a 
definitive agreement will be executed. Execution of a definitive 
agreement is subject to, among other things, confirming due diligence 
by Spencer, and other conditions and approvals by both companies' 
management, beard of directors and shareholders, as appropriate. 

16 



Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 17 of 41

During the day, Amyot's Small Cap Fund sold 136,290 shares of Spencer stock (45% of the 

day's trading volume) for gross proceeds of$36,328. The price of Spencer stock closed that day 

unchanged at $0.29 per share, but the trading volume jumped from 78,000 shares to 302,000 

shares. 

54. On November 9, 2010 at 4:01p.m., MarlcetWire carried a press release from 

Spencer announcing that it was going to disclose more details about the purported buyout offer 

by November 12. The price of Spencer stock closed that day at $0.24 per share. 

55. On November 10, 2010 at 3:31 p.m., Market Wire carried a press release from 

Spencer announcing that it had hired a Swiss finn called Strategema Capital to advise it about 

the purported buyout offer. During the day, Amyot's Small Cap Fund sold 60,000 shares of 

Spencer stock (32% of the day's trading volume) for gross proceeds of$15,650. The price of 

Spencer stock closed that day at $0.28 per share- up 17% from its closing price on the prior 

trading day -and the trading volume more than doubled, from less than 72,000 shares to more 

than 184,000 shares. 

56. On November 11, 2010 at 9:00a.m., Market Wire carried a press release from 

Spencer announcing that the purported buyout offer was worth $0.97 per share, or $245 million: 

Spencer Pharmaceutical Inc. announced today that an unsolicited 
offer received on November 4, 201 0 is at a premium of $0.97 per 
share, making the potential transaction valued at $245 million. 

According to the buyout offer documents, the purchaser is requiring 
any and all shares be tendered for a purchase price of $0.97 per share 
and with the intent to privatize the company. Spencer Pharmaceutical 
has opted to continue to keep the purchaser's name confidential until 
such time as a time line can be presented and the approval of the board 
of directors can be obtained. 

17 



Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 18 of 41

"We will conduct our own due diligence of the purchaser but so far 
they have assured us of their seriousness and have marked this 
acquisition as important in terms of strategy but not in terms of 
value," said Dr. Max Arella, President of Spencer Pharmaceutical Inc. 
"We will continue with business as usual but this will also be one of 
our priorities," further added Dr. Arella. 

At 9:30a.m., trading in Spencer stock opened at $0.31 per share- up $0.03 (11 %) from its 

closing price on the prior trading day. During the day, Amyot's Small Cap and Green Funds 

sold a total of2,316,911 shares of Spencer stock (39% of the day's trading volume) for gross 

proceeds of $976,725. The price closed that day at $0.41 per share- up 46% from its closing 

price on the prior trading day -on record trading volume of nearly six million shares. 

57. On November 12, 2010 at 8:00a.m., Market Wire carried a press release from 

Spencer announcing that its Board of Directors had approved the potential buyout and expected 

to announce the name of the purchaser by November 19. Arella was quoted as saying: 

Although we believe the value of the company to be more towards 
$1.58 per share, the offer of$0.97 is acceptable and shareholders will 
be provided the opportunity to vote on the offer as per the normal 
process. We have lots of work to do in making sure that the offer can 
be approved by shareholders as well as regulatory authorities. 

At 9:30a.m., trading in Spencer stock opened at $0.49 per share- up $0.08 (20%) from its 

closing price on the prior trading day. During the day, Amyot's Green Fund sold 1,033,220 

shares of Spencer stock (39% of the day's volume) for gross proceeds of$501,230. The price 

closed that day at $0.60 per share- up 46% from its closing price on the prior trading day - on 

trading volume of nearly 2. 7 million shares. 

58. In short, between November 10 and 12,2010, defendants pumped up the price of 

Spencer stock from $0.24 per share to $0.60 per share (an increase of 150%) by touting the 

18 



Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 19 of 41

purported $245 million buyout offer. At the same time, Amyot's Small Cap and Green Funds 

dumped 3,486,421 shares of Spencer stock for total gross proceeds of more than $1.5 million. 

59. On November 15, 2010 at 9:24a.m., lAB Media's website celebrated the recent 

surge in Spencer's stock price: 

It has been a fabulous week for Spencer Pharmaceutical, Inc. It 
rallied on monstrous volume the last 2 trading days closing on Friday 
at $0.60, up 186% from last Monday at $0.21. The reason is Spencer 
received an all cash buyout offer from an undisclosed party at $0.97 
per share. Spencer retained the services of a boutiques financial 
consultancy company in Switzerland to advise on the transaction. 

But here is the question on all investors' lips: Who is this Buyer? 

As per their last PR on Friday, it will be revealed by November 19th, 
2010. We suggest that you keep a close eye on Spencer as there is 
still a lot of potential benefits to be made as we expect to see an 
increase in price and volume when the name of the buyer will be 
released. 

At 9:35a.m., Mar/ret Wire carried a press release from Spencer with additional information about 

the purported buyout offer: 

According to ongoing negotiations, the offering party has stipulated 
that the Buyout was for 100% of the shares and that upon an agreed 
timeline that the shares will be required to be tendered by all 
shareholders. They have also stated that they reserved the right to 
acquire shares in the open market prior to the closing of the 
transaction. They have assured that they would place the funds into 
escrow and a mutual timeline was to be established. The objective of 
the offering party is to take the company private as at the close of the 
transaction. The company expects to receive the approval by the 
offering party to release their name and contact information on or 
before November 25, 20 I 0. 

"We are moving in the right step to assure a transaction is concluded 
for our shareholders," said Dr. Max Arella, President of Spencer 
Pharmaceutical Inc. "We understand that there is a lot of scientism 
[sic] with the planned transaction because ofthe confidentiality ofthe 
buyer and we can only assure our shareholders that we are working 
diligently and in good faith. The offering party is not an American 

19 



Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 20 of 41

company and the cultural differences and language sometimes require 
more attention," further added Dr. Arella. 

During the day, Amyot's Small Cap and Green Funds sold a total of707,271 shares of Spencer 

stock (30% of the day's trading volume) for gross proceeds of$407,391. 

60. On November 16, 20 I 0 at 9:05 a.m., Market Wire carried a press release from 

Spencer that identified the purported buyer as Al-Dora Holdings, a Kuwaiti company: 

Spencer Pharmaceutical Inc. disclosed today that the Al-Dora 
Holdings is the buyout offering entity. 1 

According to information provided to the company, the Al-Dora 
Holdings is a Kuwaiti private investment company owned and 
managed by some of the Gulfs richest families. The Al-Dora 
Holdings is represented by its chairman, His Excellency Dr. Bandar 
AI-Dhafiri and its CEO His Excellency Hussein Al-Awaid. 

"We are happy to now be advanced enough to disclose the name of 
the acquiring party," said Dr. Max Arella, President of Spencer 
Pharmaceutical Inc. "Even though we are advancing with our 
research and licensing we are putting forth all necessary efforts to see 
this transaction to a successful conclusion," further added Dr. Arella. 

During the day, Amyot's Small-Cap Fund sold 172,120 shares of Spencer stock (18% of the 

day's trading volume) for gross proceeds of$83,048. 

61. On November 23,2010 at 9:00a.m., Market Wire carried a press release from 

Spencer announcing that Al-Dorra had committed to give it a non-refundable $500,000 deposit: 

Spencer Pharmaceutical Inc. announced today that it has received an 
irrevocable commitment for $500,000 in the Company from Al­
Dorra. This commitment, the form of which will be determined, will 
be non-refundable. 

According to the letter by Al-Dorra, they will forward this 
commitment on or before November 30, 2010. The non-refundable 

1 The available documents use two different spellings ("Al-Dora" and "Al-Dorra") to refer to the 
purported Kuwaiti company. In the allegations that follow, the Commission will use whichever 
spelling appears in the relevant document. 

20Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 21 of 41

deposit is intended as a sign of good faith and will enable the 
company and its independent financial advisors to properly consider 
the $0.97 offer proposed by Al-Dorra. It should be noted that even 
though the Company will accept this non-refundable commitment, 
Company management is obliged by law to review any third party 
offer presented. 

"This deposit is yet another great gesture by the Al-Dorra group and 
their interest in our technologies is unparalleled and we look forward 
to hosting the dinner in their honor," said Dr. Max Arella, President of 
Spencer Pharmaceutical Inc. "The $0.97 offer is not yet established 
but each significant step, such as this investment, brings us further to 
considering whether such offer is in the best interests of our 
shareholders," further added Dr. Arella. 

During the day, Arnyot's Small Cap Fund sold 735,470 shares of Spencer stock (43% of the 

day's trading volume) for gross proceeds of$155,476. 

62. On November 24, 2010 on 9:48a.m., Market Wire carried a press release from 

Spencer announcing that it was cancelling 36 million shares of its common stock, which would 

boost the purported buyout offer to $1.1 0 per share, and that a dinner to honor representatives of 

Al-Dorra would be held on November 30: 

Spencer Pharmaceutical Inc. announced today that it is in the process 
of cancelling 36,000,000 shares, which had been previously issued, 
and the said shares will be returned to treasury. 

According to the buyout offer of$245 million, the per share price is 
now based on 222,431,359 shares outstanding and therefore the 
reflected amount will be at $1.10 per share. The company expects to 
sign a definitive agreement with Al-Dorra upon their official visit to 
Canada scheduled for November 30, 2010, where the company will 
host a dinner in their honor. It was previously noted that the company 
has the legal requirement to review any third party offer, even if Al­
Dorra has irrevocably committed to a $500,000 deposit. 

"The reduction in outstanding shares is another way to get a better 
price for our shareholders," said Dr. Max Arella, President of Spencer 
Pharmaceutical Inc. "Even if we believe the offer to reflect the value 
of our enterprise we will continue to negotiate and look for ways to 
increase the value to our shareholders," further added Dr. Arella. 

21 



Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 22 of 41

During the day, Amyot's Small Cap Fund sold 121,700 shares of Spencer stock for gross 

proceeds of$251,436. 

63. On November 30, 2010 at 9:00a.m., MarketWire carried a press release from 

Spencer announcing that the dinner to honor representatives of Al-Dorra had been postponed 

until December 8. During the day, Amyot's Small Cap Fund sold 1,919,636 shares of Spencer 

stock (46% of the day's trading volume) for gross proceeds of$185,959. 

64. On December 8, 2010 at 10:27 a.m., MarketWire carried a press release from 

Spencer announcing that the dinner to honor representatives of Al-Dorra was going ahead that 

evening. During the day, Amyot's Small Cap Fund sold 102,403 shares of Spencer stock for 

gross proceeds of $23,141. The price closed that day at $0.20 per share- up 11% from its 

closing price on the prior trading day. 

65. Spencer received a purported "Conditions to Offer to Purchase Agreement" dated 

December 8, 2010 in which Al-Dora supposedly stated that it would put $245 million in escrow 

and that the acquisition was expected to close by March 17, 2011. 

66. On December 10 at 9:00a.m., Market Wire carried a press release from Spencer 

announcing that it had "formalized" the buyout offer from Al-Dorra, and that the offer would 

close by March 17, 2011: 

Spencer Pharmaceutical Inc. announced today that it has formalized 
the buyout offer with the Al-Dorra Group as a successful result of 
meetings held in Montreal, Canada over the past week. 

According to the terms of the format buyout offer, Al-Dorra will 
acquire Spencer Pharmaceutical for $245 million USD on an all cash 
transaction to close on or before March 17, 2011. As per the terms of 
the formal offer, Al-Dorra reserves the right to acquire shares in the 
open market and Al-Dorra will deposit $500,000 in the company's 

22 



Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 23 of 41

account to be used to pay legal fees, and expenses associated with the 
ongoing business operations of Spencer Pharmaceutical. 

"We are very satisfied with the terms of the buyout offer as it is very 
beneficial to our shareholders," said Dr. Max Arella, President of 
Spencer Pharmaceutical Inc. "I would personally like to thank His 
Excellency Hussein Al-Awaid for his time and travel commitment in 
formalizing the agreement with our board on behalf of our 
shareholders," further added Dr. Arella. 

At 9:30a.m., trading in Spencer stock opened at $0.27 per share- up $0.07 (35%) from its 

closing price on the prior trading day. The price closed that day at $0.29 per share- up 45% 

from the prior day's close- on trading volume of more than 3.8 million shares. 

67. On December 21 at 9:00a.m., Market Wire carried a press release from Spencer 

announcing that it had received the $500,000 non-refundable deposit from Al-Dorra: 

Spencer Pharmaceutical Inc. announced today that it has received the 
$500,000 deposit from Al-Dorra as an ongoing process to close the 
$245 million buyout. 

According to the company, a third party corporate finance advisory 
firm working with Al-Dorra has provided a non-refundable deposit to 
the company in the amount of$500,000 to be used for ongoing 
business expenses and expenses related to the buyout offer including 
but not limited to legal fees. 

"We are pleased that the next anticipated step in the process of the 
buyout offer is completed," said Dr. Max Arella, President of Spencer 
Pharmaceutical Inc. "We intend to continue to update our 
shareholders on the progress of the buyout offer as it is presented to 
us." 

During the day, Amyot's Small Cap Fund sold 3,101,242 shares of Spencer stock (75% of the 

day's trading volume) for gross proceeds of$445,111. The next day, the Small Cap Fund sold 

1,894,758 shares of Spencer stock (54% of the day's trading volume) for gross proceeds of 

$199,164. 

23 



Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 24 of 41

68. On January 20, 2011, a public news outlet called RediNews carried a press release 

purportedly from Al-Dorra announcing that it was going to spin off a subsidiary called Hail First 

Phanna Inc. ("Hail First Pharma"): 

According to the company, Hail First Phanna Inc. is the result of several 
acquisitions and or joint-ventures with international pharmaceutical companies 
including but not limited to Spencer Phannaceutical Inc., a public traded 
company listed on the US OTC Markets (PINK:SPPH). 

Those statements were false and misleading because Hail First Pharma had not acquired or 

entered into a joint venture with Spencer. The price of Spencer stock closed that day at $0.21 per 

share- up 62% from its closing price on the prior trading day. 

69. On January 26,2011, Amyot sent an email to Karol Schlosser, ostensibly a 

director of an entity in Great Britain called Sterling Stock Investment Ltd. ("Sterling,,), with a 

draft letter to be sent from Sterling to Spencer. The letter, which was sent to Spencer with the 

date of January 31, stated that Sterling was going to guarantee that Al-Dorra had access to $500 

million to complete the acquisition of Spencer. Spencer received a second letter from Schlosser 

dated February 3, 2011 confirming the purported guarantee. 

70. On January 31, 2011 at 5:30p.m., Market Wire carried a press release from 

Spencer announcing that it had received confirmation that Al-Dorra had sufficient funds to 

complete the transaction: 

Management of Spencer Phannaceutical Inc. announced that the 
Company has received from an investment group mandated by His 
Excellency Hussein Al-Awaid (Al-Dorra group) confirmation of their 
intent to prepare availability of funds for the proposed buy-out of 
Spencer. The release of funds is subject to completion of due 
diligence and preparation of final documentation. Specific time­
frame has not changed as per the original parameters previously 

24 



Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 25 of 41

disclosed in press releases on December lOth, and 14th, 2010 
respectively. 

During the next day, Amyot's Small Cap Fund sold 881,574 shares of Spencer stock (54% of the 

day's trading volume) for gross proceeds of$116,719. 

71. On February 4, 2011 at 9:00a.m., Market Wire carried a press release from 

Spencer announcing that its management had committed to tender its own holdings of Spencer 

stock to Al-Dorra: 

Spencer Pharmaceutical Inc. announced that the Company 
management has committed to tender their shares of common stock, 
which holdings equal to an aggregate of 48,750,000 common shares 
and represent approximately 20% of the total issued and outstanding 
shares of the common stock of the Company. 

Management believes that this commitment represents another step in 
the A1-Dorra Holdings buyout process related to the A1-Dorra "Hail 
First Pharma" subsidiary. It is also important for our shareholders to 
know that the Spencer Pharmaceutical team is working in a dedicated 
and cohesive effort to the successful conclusion of the buyout offer. 

During the day, Amyot's Green Fund sold 1,148,500 shares of Spencer stock (63% of the day's 

trading volume) for gross proceeds of$115,238. 

72. On February 16, 2011, the chartered accountant in Montreal released audited 

2010 financial statements for Spencer. The balance sheet indicated that Spencer had assets of 

$772,197 ($316,269 supposedly related to the patent and $455,928 in cash, which presumably 

represented the balance of the $500,000 deposit), liabilities of$1,643,223 ($471,030 of accounts 

payable and accruals and $1,172, 193 in loans payable), and a shareholders' deficit of nearly 

$18 million. The earnings statement indicated that Spencer had no revenue and a net loss of 

$943,196 in 2010. 

25 



Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 26 of 41

73. As noted above, Spencer had announced on December 10,2010, that the 

acquisition by Al-Dorra was expected to close by March 17, 2011. Several investors called the 

company with questions about the anticipated transaction. Morrice fielded many of the calls and 

assured the investors that the transaction would close on time. 

74. On March 15,2011, Spencer signed a purported "mutual extension agreement" 

with Al-Dorra and Hail First Pharma. The agreement stated: 

Spencer Pharmaceutical Inc. has requested an extension to the 
closing of the buy-out offer to finalize and release the independent 
animal research analysis to shareholders and stakeholders. Al-Dorra 
and its subsidiary Hail First Pharma has agreed to provide additional 
funding to facilitate the completion of the animal studies and 
ongoing operational expenses in the amount of $1.2 million in (three 
installments of $400,000 each dated March 21, April 21 and May 
21, 2011 ). As an accommodation, AI-Dorra/Hail First Pharma has 
agreed to postpone the closing of the buy-out offer and keep the 
offer open until the end of the 2nd Quarter, 2011. 

The agreement was signed by Arella for Spencer and by Amyot as a representative of Al-Dorra 

and Hail First Pharma. 

75. On March 16,2011 at 9:24a.m., Market Wire carried a press release from Spencer 

announcing that it had requested an extension of the closing date for the acquisition by Al-Dorra: 

Spencer Pharmaceutical Inc. has requested an extension to the closing 
of the buy-out offer to finalize and release the independent animal 
research analysis to shareholders and stakeholders. 

The Company is pleased to report that Al-Dorra and its subsidiary 
Hail First Pharma have agreed to provide additional funding to 
facilitate the completion of the animal studies and ongoing 
operational expenses in the amount of $1.2 million. As an 
accommodation, Al-Dorra/Hail First Pharma have agreed to postpone 
the closing of the buy-out offer and keep the offer open until the end 
of the 2nd Quarter, 2011. 

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In further news, the holders of an additional One-hundred and three 
million ( 1 03,000,000) shares of common stock have agreed to tender 
their common stock in favor of the Al-Dorra buy-out and its 
subsidiary Hail First Pharma. This represents, in addition to 
management's shares already committed, an aggregate of over 55% of 
the issued and outstanding shares in the Company. 

"Spencer Pharmaceutical has an obligation to provide full and fair 
disclosure in effecting a securities transaction and requires the 
additional time to fulfill this requirement," stated Dr. Max Arella, 
President and CEO of Spencer Pharmaceutical Inc. Furthermore, 
"We would like to thank the continued support of AI Dorra and Hail 
First Pharm in our mutual efforts to bring this transaction to a 
successful conclusion!" added Dr. Arella. 

At 10:47 a.m., Market Wire carried a similar press release purportedly from Hail First Pharma. 

76. There was little news about the purported acquisition after March 16, 2011. In 

September 2011, Spencer announced that negotiations between the parties had ceased. No 

acquisition ever took place. 

77. Between November 2, 2010 -when the pump-and-dump scheme began in earnest 

with news about the purported buyout offer- and April 18, 2011, Amyot' s Small Cap and Green 

Funds sold approximately 36 million shares of Spencer stock for total gross proceeds of more 

than $5.8 million. During that period, there were more than thirty days when Amyot's trading in 

Spencer stock accounted for more than 50% of the daily trading volume. 

The Purported Buyout Offer Was Not Real 

78. Amyot, Arella, and Morrice -and, by extension, the companies they controlled 

collectively (Spencer) or individually (lAB Media and Hilbroy controlled by Amyot)- knew or 

were reckless in not knowing that the purported buyout offer was not real. 

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79. According to several of its press releases, Spencer conducted due diligence about 

Al-Dora. However, Arella and Morrice never confirmed that Al-Dora was a legitimate company. 

They never spoke with anyone at the Russian finn that first approached them about the buyout. 

They supposedly sent someone to visit Al-Dora's offices in Kuwait, but the individual did not 

meet with any representatives of Al-Dora, and the office building he identified does not actually 

contain a business by that name. 

80. Strategema Capital, the Swiss finn hired by Spencer to evaluate the buyout offer, 

did not speak with anyone at Al-Dora and found nothing in the public domain to confirm the 

existence of Al-Dora. 

81. Spencer's November 16, 2010 press release identified Al-Dora Holdings as "a 

Kuwaiti private investment company owned and managed by some of the Gulfs richest 

families" and identified "His Excellency Dr. Bandar Al-Dhafiri" as its Chairman. Arella and 

Morrice never met or spoke with Al-Dhafiri, and they obtained no evidence that the name refers 

to a real person. 

82. Spencer's November 16,2010 press release also identified "His Excellency 

Hussein Al-Awaid" as the CEO of Al-Dora Holdings. Al-Awaid is a real person, but he is 

simply a Kuwaiti-born Canadian citizen who is vice president of a Canadian immigration 

company. Al-Awaid has had other business dealings with Amyot, who has described him at 

times as being affiliated with Hilbroy. 

83. The letter dated November 22,2010 in which Al-Dora supposedly offered to 

provide the $500,000 non-refundable deposit contains no return address, no letterhead, and no 

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other contact information, and the signature at the bottom of the letter is illegible and does not 

contain any typed name. 

84. The letter dated December 8, 201 0 and entitled "Conditions to Offer to Purchase 

Agreement" did not originate with Al-Dora. Rather, an outside attorney hired by Spencer 

provided Morrice with a blank template that Arella and/or Morrice filled in. The brief document 

does not contain the level of detail and evidence of due diligence to be expected in a multi­

million dollar transaction, and there are multiple spelling and grammatical errors. The document 

provides only a post office box address for Al-Dora. The document was purportedly signed by 

Bandar Al-Dhafiri for Al-Dora, but as noted above, Arella and Morrice never met Al-Dhafiri, 

and they obtained no evidence that the name refers to a real person. 

85. The $500,000 non-refundable deposit that Spencer received on December 21, 

2010 did not come from Al-Dora. Rather, Amyot caused Hilbroy to advance the $500,000 to 

Spencer in exchange for 500,000 shares of Spencer stock. 

86. Spencer received two letters from Sterling purporting to guarantee that Al-Dora 

had access to $500 million. However, Amyot drafted the letter for his contact Schlosser to sign, 

and the Sterling finn at the address shown on the letterhead is not an investment finn but rather a 

chartered accountant business that has no knowledge of the people or information mentioned in 

the letters. 

87. When Al-Dora's supposed subsidiary, Hail First Pharma, issued press releases, 

the press releases were sometimes drafted by Amyot, and the company's contact information was 

sometimes listed as Hilbroy. 

88. Besides the circumstantial evidence set forth above, the purported acquisition of 

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Spencer makes absolutely no business sense. On November 12, 2010, Spencer announced that 

the buyer was prepared to pay $245 million for the company. Yet just a week earlier, the 

company's interim financial statement indicated that it had assets of$111,532, liabilities of 

$303,855, and a shareholders' deficit of more than $17 million. The interim statement also 

indicated that Spencer had no revenue and a net loss of$188,660 in the third quarter of2010. 

Further, an inquiry at the PTO would have revealed that the company's only supposed asset- the 

U.S. patent- had been denied by the PTO. It is inconceivable that a "Kuwaiti private investment 

company owned and managed by some of the Gulfs richest families" would have offered to pay 

$245 million for a fledgling company with no legitimate assets and no revenue. Also, the 

acquisition was styled as a "tender offer", but none of the necessary paperwork for a real tender 

offer was ever filed with the Commission, and public investors were never given instructions 

about how to tender their shares. 

FIRST CLAIM FOR RELIEF 
(Violation of Sections 17(a)(l) and (3) 

of the Securities Act by All Defendants) 

89. The Commission repeats and incorporates by reference the allegations in 

paragraphs 1-88 above. 

90. Between June 2010 and March 2011, as set forth above, Spencer disseminated 

numerous false and misleading press releases, first about supposed progress with its drug 

delivery technology and then about a supposed buyout offer from a Mideast company that 

wanted to pay $245 million for all of its outstanding shares. These press releases were false and 

misleading because Spencer had no real drug delivery technology and because there was no real 

buyout offer. Amyot wrote many of the press releases, Arella was quoted in almost all of them, 

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Arella and Morrice worked with Amyot to create and disseminate them, often through Hilbroy, 

lAB Media repeated many of the false and misleading statements on its own website, and 

Morrice reassured investors that the statements were true. In addition, while Spencer was issuing 

the press releases, Amyot, Arella, Morrice, lAB Media, and Hilbroy were conducting a 

promotional campaign using Internet websites and newsletters to tout Spencer's supposed 

business activities and the buyout offer. 

91. Defendants, directly and indirectly, acting intentionally, knowingly or recklessly, 

in the offer or sale of securities by the use of the means or instruments of transportation or 

communication in interstate commerce or by the use of the mails: have employed or are 

employing devices, schemes or artifices to defraud; or have engaged or are engaging in 

transactions, practices or courses of business which operate as a fraud or deceit upon purchasers 

of the securities. 

92. As a result, defendants have violated and, unless enjoined, will continue to violate 

Sections 17(a)(l) and (3) ofthe Securities Act [I 5 U.S.C. §§77q(a)(I ), (3)]. 

SECOND CLAIM FOR RELIEF 
(Violation of Section lO(b) of the Exchange Act 
and Rule 10b-5(a) and (c) by All Defendants) 

93. The Commission repeats and incorporates by reference the allegations in 

paragraphs I-91 above. 

94. Between June 201 0 and March 20 II, as set forth above, Spencer disseminated 

numerous false and misleading press releases, first about supposed progress with its drug 

delivery technology and then about a supposed buyout offer from a Mideast company that 

wanted to pay $245 million for all of its outstanding shares. These press releases were false and 

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misleading because Spencer had no real drug delivery technology and because there was no real 

buyout offer. Amyot wrote many of the press releases, Arella was quoted in almost all of them, 

Arella and Morrice worked with Amyot to create and disseminate them, often through Hilbroy, 

lAB Media repeated many of the false and misleading statements on its own website, and 

Morrice reassured investors that the statements were true. In addition, while Spencer was issuing 

the press releases, Amyot, Arella, Morrice, lAB Media, and Hilbroy were conducting a 

promotional campaign using Internet websites and newsletters to tout Spencer's supposed 

business activities and the buyout offer. 

95. Defendants, directly or indirectly, acting intentionally, knowingly or recklessly, 

by the use of means or instrumentalities of interstate commerce or of the mails, in connection 

with the purchase or sale of securities: have employed or are employing devices, schemes or 

artifices to defraud; or have engaged or are engaging in acts, practices or courses of business 

which operate as a fraud or deceit upon certain persons. 

96. As a result, defendants have violated and, unless enjoined, will continue to violate 

Section IO(b) of the Exchange Act [15 U.S.C. §78j(b)] and Rule 10b-5(a) and (c) [17 C.F.R. 

§§240.10b-5(a}, (c)]. 

THIRD CLAIM FOR RELIEF 
(Violation of Section 17(a)(2) of the Securities Act by 

Spencer, Amyot, Arella, and Morrice) 

97. The Commission repeats and incorporates by reference the allegations in 

paragraphs 1-96 above. 

98. Between June 2010 and March 2011, as set forth above, Spencer disseminated 

numerous false and misleading press releases, first about supposed progress with its drug 

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delivery technology and then about a supposed buyout offer from a Mideast company that 

wanted to pay $245 million for all of its outstanding shares. These press releases were false and 

misleading because Spencer had no real drug delivery technology and because there was no real 

buyout offer. Amyot wrote many of the press releases, Arella was quoted in almost all of them, 

Arella and Morrice worked with Amyot to create and disseminate them, and Morrice reassured 

investors that the statements were true. 

99. Defendants Spencer, Amyot, Arella, and Morrice, directly and indirectly, acting 

intentionally, knowingly or recklessly, in the offer or sale of securities by the use of the means or 

instruments of transportation or communication in interstate commerce or by the use of the 

mails: have obtained or are obtaining money or property by means of untrue statements of 

material fact or omissions to state a material fact necessary in order to make the statements 

made, in the light of the circumstances under which they were made, not misleading. 

100. As a result, defendants Spencer, Amyot, Arella, and Morrice have violated and, 

unless enjoined, will continue to violate Section 17(a)(2) of the Securities Act [15 U.S.C. 

§77q(a)(2)]. 

FOURTH CLAIM FOR RELIEF 
(Violation of Section lO(b) of the Exchange Act and Rule l0b-5(b) by 

Spencer, Amyot, Arella, and Morrice) 

101. The Commission repeats and incorporates by reference the allegations in 

paragraphs 1-100 above. 

102. Between June 2010 and March 2011, as set forth above, Spencer disseminated 

numerous false and misleading press releases, first about supposed progress with its drug 

delivery technology and then about a supposed buyout offer from a Mideast company that 

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wanted to pay $245 million for all of its outstanding shares. These press releases were false and 

misleading because Spencer had no real drug delivery technology and because there was no real 

buyout offer. Amyot wrote many of the press releases, Arella was quoted in almost all of them, 

Arella and Morrice worked with Amyot to create and disseminate them, and Morrice reassured 

investors that the statements were true. 

103. Defendants Spencer, Amyot, Arella, and Morrice, directly or indirectly, acting 

intentionally, knowingly or recklessly, by the use of means or instrumentalities of interstate 

commerce or of the mails, in connection with the purchase or sale of securities: have made or 

are making untrue statements of material fact or have omitted or are omitting to state a material 

fact necessary to make the statements made, in the light of the circumstances under which they 

were made, not misleading. 

104. As a result, defendants Spencer, Amyot, Arella, and Morrice have violated and, 

unless enjoined, will continue to violate Section 10(b) of the Exchange Act [15 U.S.C. §78j(b)] 

and Rule 10b-5(b) [17 C.F.R. §240.10b-5(b)]. 

FIFTH CLAIM FOR RELIEF 
(Aiding and Abetting Spencer's Violations of 

Section 17(a) of the Securities Act by 
Arella, Morrice, lAB Media, and Hilbroy) 

105. The Commission repeats and incorporates by reference the allegations in 

paragraphs 1-1 04 above. 

1 06. As set forth above, defendant Spencer, directly and indirectly, acting 

intentionally, knowingly or recklessly, in the offer or sale of securities by the use of the means or 

instruments of transportation or communication in interstate commerce or by the use of the 

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mails: (a) has employed or is employing devices, schemes or artifices to defraud; (b) has 

obtained or is obtaining money or property by means of untrue statements of material fact or 

omissions to state a material fact necessary in order to make the statements made, in the light of 

the circumstances under which they were made, not misleading; or (c) has engaged or is 

engaging in transactions, practices or courses of business which operate as a fraud or deceit upon 

purchasers of the securities. As a result, Spencer has violated and, unless enjoined, will continue 

to violate Section 17(a) of the Securities Act [15 U.S.C. §77q(a)]. 

107. Defendants Arella, Morrice, lAB Media, and Hilbroy each knowingly or 

recklessly provided substantial assistance to defendant Spencer's violations of Section 17(a) of 

the Securities Act. 

108. As a result, defendants Arella, Morrice, lAB Media, and Hilbroy each aided and 

abetted Spencer's violations of Section 17(a) of the Securities Act (15 U.S.C. §77q(a)]. 

SIXTH CLAIM FOR RELIEF 
(Aiding and Abetting Spencer's Violations of 

Section lO(b) ofthe Exchange Act and Rule lOb-5 by 
Arella. Morrice, lAB Media, and Hilbroy) 

109. The Commission repeats and incorporates by reference the allegations in 

paragraphs 1-1 08 above. 

110. As set forth above, defendant Spencer, directly or indirectly, acting intentionally, 

knowingly or recklessly, by the use of means or instrumentalities of interstate commerce or of 

the mails, in connection with the purchase or sale of securities: (a) has employed or is 

employing devices, schemes or artifices to defraud; (b) has made or is making untrue statements 

of material fact or have omitted or are omitting to state a material fact necessary to make the 

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statements made, in the light of the circumstances under which they were made, not misleading; 

or (c) has engaged or is engaging in acts, practices or courses of business which operate as a 

fraud or deceit upon certain persons. As a result, defendant Spencer has violated and, unless 

enjoined, will continue to violate Section lO(b) of the Exchange Act and Rule 10b-5. 

111. Defendants Arella, Morrice, lAB Media, and Hilbroy each knowingly or 

recklessly provided substantial assistance to defendant Spencer's violations of Section lO(b) of 

the Exchange Act and Rule 1 Ob-5(b ). 

112. As a result, defendants Arella, Morrice, lAB Media, and Hilbroy each aided and 

abetted Spencer's violations of Section IO(b) of the Exchange Act [15 U.S.C. §78j(b)] and 

Rule IOb-5. 

SEVENTH CLAIM FOR RELIEF 
(Amyot's Control Person Liability for Spencer's Violations of 

Section lO(b) of the Exchange Act and Rule lOb-5) 

113. The Commission repeats and incorporates by reference the allegations in 

paragraphs 1-112 above. 

114. As set forth above, defendant Spencer, directly or indirectly, acting intentionally, 

knowingly or recklessly, by the use of means or instrumentalities of interstate commerce or of 

the mails, in connection with the purchase or sale of securities: (a) has employed or is 

employing devices, schemes or artifices to defraud; (b) has made or is making untrue statements 

of material fact or have omitted or are omitting to state a material fact necessary to make the 

statements made, in the light of the circumstances under which they were made, not misleading; 

or (c) has engaged or is engaging in acts, practices or courses of business which operate as a 

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fraud or deceit upon certain persons. As a result, defendant Spencer has violated and, unless 

enjoined, will continue to violate Section IO(b) of the Exchange Act and Rule 10b-5. 

115. As an officer and director of Spencer until November 2009 and the person who 

orchestrated the promotional campaign for Spencer and drafted many of its press releases, 

defendant Amyot exercised control over the public statements and other activities of Spencer that 

resulted in its violations of Section IO(b) ofthe Exchange Act and Rule IOb-5. 

116. By reason of the foregoing, defendant Amyot is liable as a control person under 

Section 20(a) of the Exchange Act [15 U.S.C. §78t(a)] for Spencer's violations of Section 10(b) 

of the Exchange Act [15 U.S.C. § 78j(b)] and Rule IOb-5 thereunder [17 C.F.R. § 240.10b-5]. 

EIGHTH CLAIM FOR RELIEF 
(Violation of Sections S(a) and (c) of the Securities Act by 

Defendants Spencer, Amyot, and Arella) 

117. The Commission repeats and incorporates by reference the allegations in 

paragraphs 1-116 above. 

118. On July 14, 2008, Finkelstein entered into a subscription agreement with 

Wolverine, which was "to be renamed Spencer Pharmaceutical Inc.," whereby Finkelstein agreed 

to pay $110,000 for 22 million shares of stock. Amyot controlled both companies at the time of 

the transaction. There is no evidence that Finkelstein ever paid the $110,000. Arella's signature 

appears on the document on behalf of Spencer, even though he did not become president of the 

company until June 2009, suggesting that the agreement may have been back-dated. 

119. In November 2009, an attorney issued an opinion letter for Spencer stating that, as 

of July 14, 2009, the requirements of Rule 144 of the Securities Act had been met regarding 

Finkelstein's 22 million Spencer shares and so the restrictive legend could be lifted. The 

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attorney concluded, among other things, that Finkelstein was not an affiliate of Spencer and that 

the shares had been held for a year based on the July 14, 2008 date of the subscription 

agreement. The factual predicates for the attorney's opinion were incorrect, as Amyot's control 

of both Spencer and Finkelstein meant that Finkelstein was an affiliate of Spencer, and the 

subscription agreement may have been backdated. 

120. On January 12, 2010, Spencer asked its transfer agent to issue 22 million 

unrestricted shares to Finkelstein. The shares were to be sent to Hilbroy on Finkelstein's behalf. 

121. On or about January 20, 2010, Spencer's transfer agent sent Finkelstein's stock 

certificate to a Swiss bank. The documentation for the transfer was signed by Amyot. 

122. On March 24,2010, Finkelstein sold 12 million shares to Tillerman for $25,000. 

On April16, 2010, shares were deposited into the account of Amyot's Small Cap Fund. 

123. No registration statement was ever filed for the 22 million shares that Finkelstein 

received, and no exemption from registration was available. 

124. Spencer, Amyot, and Arella orchestrated the movement of 12 million unrestricted 

Spencer shares from Spencer through Finkelstein, then through the Swiss bank, and then to 

Amyot's Small Cap Fund at Tillerman. This share movement evaded the registration 

requirements of the Securities Act. 

125. Spencer, Amyot, and Arella, directly or indirectly: (a) have made or are making 

use of the means or instruments of transportation or communication in interstate commerce or of 

the mails to sell, through the use or medium of a prospectus or otherwise, securities as to which 

no registration statement has been in effect and for which no exemption from registration has 

been available; and/or (b) have made or are making use of the means or instruments of 

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transportation or communication in interstate commerce or of the mails to offer to sell, through 

the use or medium of a prospectus or otherwise, securities as to which no registration statement 

has been filed and for which no exemption from registration has been available. 

126. As a result, Spencer, Amyot, and Arella have violated and, unless enjoined, will 

continue to violate Sections 5(a) and (c) of the Securities Act [15 U.S.C. §§77e(a), (c)]. 

PRAYER FOR RELIEF 

WHEREFORE, the Commission requests that this Court: 

A. Enter a permanent injunction restraining the defendants, and each of their agents, 

servants, employees, and attorneys and those persons in active concert or participation with them 

who receive actual notice of the injunction by personal service or otherwise, including facsimile 

transmission or overnight delivery service, from directly or indirectly engaging in the conduct 

described above, or in conduct of similar purport and effect, in violation of: 

1. Sections 17(a) of the Securities Act [15 U.S.C. §77q(a)]; and 

2. Section 10(b) of the Exchange Act [15 U.S.C. §78j(b)] and Rule lOb-5 
thereunder [17 C.F.R. §240.10b-5]; 

B. Enter a permanent injunction restraining defendants Spencer, Amyot, and Arella, 

and each of their agents, servants, employees, and attorneys and those persons in active concert 

or participation with them who receive actual notice of the injunction by personal service or 

otherwise, including facsimile transmission or overnight delivery service, from directly or 

indirectly engaging in the conduct described above, or in conduct of similar purport and effect, in 

violation of Sections 5(a) and (c) of the Securities Act [15 U.S.C. §§77e(a), (c)]; 

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C. Require the defendants to disgorge their ill-gotten gains, plus pre-judgment 

interest; 

D. Order the defendants to pay appropriate civil penalties pursuant to Section 20(d) 

ofthe Securities Act [15 U.S.C. §77t(d)] and Section 2l(d)(3) of the Exchange Act [15 U.S.C. 

§78u(d)(3)] ; 

E. Enter an order, pursuant to Section 2 1(d)(2) of the Exchange Act [15 U.S.C. 

§78u( d)(2)], barring Amyot, Arella, and Morrice from serving as an officer or director of any 

issuer required to fi le reports with the Commission pursuant to Sections 12(b ), 12(g) or 15( d) of 

the Exchange Act [15 U.S.C. §§78l(b), 78l(g), 78o(d)]; 

F. Enter an order, pursuant to Section 20(g) of the Securities Act [ 15 U .S.C. §77t(g)] 

and Section 2 1(d)(6)(8) of the Exchange Act [15 U.S.C. §78u(d)(6)(B)], barring Amyot, Arella, 

and Morrice from participating in an offering of a penny stock, as defined in Section 3(a)(51) of 

the Exchange Act [15 U.S.C. §78c(a)(51)]; 

G. Retain jurisdiction over this action to implement and carry out the terms of all 

orders and decrees that may be entered; and 

H. A ward such other and further relief as the Court deems just and proper. 

Respectfully submitted, 

M!~£1i~7550) 
Regional Trial Counsel 

Frank C. Hunt ington (Mass. Bar No. 544045) 
Senior Trial Counsel 

Amy Gwiazda (Mass. Bar No. 663494) 
Senior Enforcement Counsel 

James R. Drabick (Mass. Bar No. 667460) 
Enforcement Counsel 

40Case 1:12-cv-12334   Document 1   Filed 12/17/12   Page 41 of 41

Dated: December 17,2012 

Attorneys for Plaintiff 
SECURITIES AND EXCHANGE COMMISSION 
33 Arch Street, 23rd Floor 
Boston, MA 02110 
(617) 573-8960 (Huntington direct) 
(617) 573-4590 (fax) 
[email protected] (Huntington email) 

41