"Using that control, the three men caused the companies to issue more than 8 million shares of stock, in most cases for little or no consideration, to foreign shell companies, the SEC alleged."
"They then caused 5 million of those shares, all of which were either unregistered or improperly registered, to be sold to the public, generating about $8 million, the SEC charged."
SEC sues one of its former lawyers, 16 others
WASHINGTON, Nov 12 (Reuters) - The Securities and Exchange Commission said on Friday it sued 17 people, including a former SEC lawyer, for their part in an alleged scheme that ran for about two years to sell stock at inflated prices.
The SEC alleged in a civil complaint filed earlier this week in New York that 39-year-old Grant Curtis of Danville, Calif.; and Leo Mangan, 43, and Timothy Masley, 38, both of Lindenhurst, N.Y., acted as a partnership and together exercised control over three companies.
The companies were Windswept Environmental Group Inc. <WEGI.OB>, Pilot Transport Inc. and ICIS Management Inc.
Using that control, the three men caused the companies to issue more than 8 million shares of stock, in most cases for little or no consideration, to foreign shell companies, the SEC alleged.
They then caused 5 million of those shares, all of which were either unregistered or improperly registered, to be sold to the public, generating about $8 million, the SEC charged.
Some of the other people accused by the SEC had varying roles in furthering the fraud, according to the commission.
They included James Nearen, 45, of Littleton, Colo., a staff attorney with the SEC for seven years before leaving in 1995. In 1997, Nearen, who held senior positions with the three companies, pleaded guilty to several felonies, including securities fraud, conflict of interest by a former government employee and money laundering.
In January of 1998 he was sentenced to 18 months incarceration and three years probation, the SEC said.
Nearen, Mangan and three others allegedly involved have made settlement offers to the SEC in this case.
Attorneys for the men did not immediately return telephone calls seeking comment. Curtis does not have legal representation, the SEC said.
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