An update from today's SEC Digest:
COMMISSION IMPOSES PENNY STOCK BAR AGAINST GEORGE MAHFOUZ, JR.
On September 18, the Commission entered an order imposing a penny stock bar against George E. Mahfouz, Jr., member manager of Thor Equity Group, LLC (Thor Equity), an investor relations firm headquartered in Scottsdale, Arizona, after concluding that Mahfouz disseminated false revenue and stock price projections on the Internet for CancerOption.com, Inc. (CancerOption), a penny stock company.
In the Order, the Commission found that Mahfouz, hired by CancerOption for investor relations services, arranged for two analysts to draft research reports regarding CancerOption. The reports, recommending the purchase of CancerOption's stock, contained false revenue and stock price projections for the company based on information provided by Mahfouz. The Commission also found that from August 1999 through January 2000, Mahfouz placed the reports on CancerOption's website and arranged for the false financial information to be disseminated on the Internet, despite his knowledge that the projections were false. Moreover, the Commission found that Mahfouz drafted and issued a CancerOption press release which falsely characterized one of the analysts as the "first independent analyst" to cover CancerOption even though Thor Equity had agreed to pay the analyst 5,000 shares of CancerOption stock for the report. The Commission found that the false financial projections which appeared on the Internet fueled a dramatic rise in both the price and the trading volume of CancerOption's common stock. Finally, the Commission found that throughout the time the false financial information appeared on the Internet, Mahfouz1 sold over 350,000 shares of CancerOption stock for profits of more than $180,000.
In a related action filed in U.S. District Court for the District of Arizona on September 11, 2000, Mahfouz and Thor Equity were enjoined from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Mahfouz was ordered to pay disgorgement of $180,038.51 and a civil money penalty of $50,000.00, while no civil penalty was imposed against Thor Equity based on its demonstrated inability to pay.
The Commission barred Mahfouz for five years from participating in any offering of a penny stock including: (i) acting as a promoter, finder, consultant, or other person who engages in actions with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock; or (ii) inducing or attempting to induce the purchase or sale of any penny stock. Mahfouz consented to the entry of the Order without admitting or denying the Commission's findings. For additional information see litigation release No. 16683; (September 6, 2000). (Rel. 34-43300; File No. 3-10287)
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