U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22551 / November 30, 2012
Securities and Exchange Commission v. David Ronald Allen, et al., Civil Action No. 3:11-CV-882-O (N.D. Tex.)
SEC OBTAINS FINAL JUDGMENTS IN CASE INVOLVING PONZI SCHEME AND PROMOTION OF CHINA VOICE HOLDING CORP.
On November 26 and 29, 2012, the Honorable Reed O'Connor, United States District Judge for the Northern District of Texas, entered final judgments against Alex Dowlatshahi, Christopher Mills, and Robert Wilson, permanently enjoining them and ordering monetary relief.
The final judgments against Dowlatshahi and Mills permanently enjoin them from violating Section 10(b) of the Securities Exchange Act of 1934 and Sections 5 and 17(a) of the Securities Act of 1933. Dowlatshahi, Mills, and their various companies previously consented to the injunctions to settle charges related to their role in a Ponzi scheme that sought to raise at least $8.6 million from investors across the country. The final judgment orders Dowlatshahi: (i) with his company, Lucrative Enterprises Corp., to pay disgorgement and prejudgment interest of $317,860, and a civil penalty of $150,227; (ii) with his company, Synergetic Solutions LLC, to pay disgorgement and prejudgment interest of $26,484, and a civil penalty of $12,045; (iii) with his company, Integrity Driven Network Corp., to pay a civil penalty of $50,000; and (iv) with his company, Darius Assets Holding Corp., to pay disgorgement and prejudgment interest of $322,962. The final judgment orders Mills: (i) to pay disgorgement and prejudgment interest of $2,405, and a civil penalty of $2,165; (ii) with his company, Sleeping Bear LLC, to pay disgorgement and prejudgment interest of $124,857, and a civil penalty of $116,219; and (iii) with his company, Silver Summit Holdings LLC, to pay disgorgement and prejudgment interest of $20,015, and a civil penalty of $18,025.
The final judgment against Wilson permanently enjoins him from violating Section 10(b) of the Exchange Act and Section 17(b) of the Securities Act. Wilson and his company, Strategic Capital, previously consented to the injunction to settle charges related to their role in conducting a blast fax campaign regarding China Voice Holding Corp. The final judgment orders Wilson and Strategic Capital to pay disgorgement and prejudgment interest of $764,886, and a civil penalty of $664,269. In addition, Wilson and his company, Green Horseshoe Holdings, Inc., were ordered to pay disgorgement and prejudgment interest of $73,067. The final judgment also permanently bars Wilson from participating in offerings of penny stocks.
The Commission's complaint, originally filed on April 28, 2011, alleged that China Voice, its co-founder and former CFO David Ronald Allen, and former CEO and President William F. Burbank IV made a series of false and misleading statements and omissions regarding China Voice's financial condition and business prospects. In addition, the SEC charged China Voice shareholders Ilya Drapkin and Gerald Patera with financing stock promotion campaigns regarding China Voice. These campaigns included the blast fax campaign conducted by Wilson. The Commission further alleged that Allen, with the assistance of Dowlatshahi and Mills, launched what became a Ponzi scheme that sought to raise at least $8.6 million from investors around the country. The Commission alleged that, contrary to what investors were told, investor funds were used to pay back earlier investors; to make payments to Allen, Dowlatshahi, and Mills; and to make payments to Allen-affiliated companies, including China Voice.
The Court previously entered final judgments against all other defendants in this matter.
See also: Litigation Release Nos. 21953, 21992, 22006, 22113, 22165, 22178, 22208, and 22418.