SEC moves to curtail Las Vegas penny-stock company
The Securities and Exchange Commission has moved to curtail the activities of a Nevada company that allegedly was little more than a penny-stock "pump-and-dump" operation.
The agency filed a complaint in U.S. District Court on Wednesday contending that Las Vegas-based Prime Star Group had violated numerous public company regulations, including issuing press releases about major deals that never happened and fabricating financial statements. As a result, the SEC calculated that former CEO Roger Mohlman and eight associate or allied companies, none of them in Nevada, grossed about $1.2 million by selling shares to "unwitting investors at fraudulently inflated prices."
The SEC requested a court order preventing them from similar activities in the future, forcing repayment of stock profits plus unspecified penalties and forbidding Mohlman from engaging in further penny stock activities or holding a senior position at a public company.
Calls on Wednesday to phone numbers Prime Star has listed in the past were either disconnected or taken by someone else.
The SEC delisted the stock in June and it has not filed any regular reports with the agency since then.
In a pump-and-dump, a company with a share price that runs a few cents or even a fraction of a cent will put out "good news," the so-called pump, that causes speculators to buy and push up the price. Although the change may only be a few cents, the price can easily double or triple.
The dump comes when insiders sell their holdings to reap their profits.
In one instance, the SEC said Prime Star announced the acquisition of Wild Grill Foods, with the promise of generating as much as $6 million in revenues in fourth-quarter 2009. At the same time, the company started illicitly issuing shares to insiders and others that could be dumped, although Wild Grill never produced any tangible returns for Prime Star.
Although its announced focus changed several times after its incorporation in 1999, the most recent version was said to be in the beverage and drink package business. However, it reported no revenues or profits.
Contact reporter Tim O'Reiley at
toreiley@reviewjournal.com or 702-387-5290.
