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Stratcomm ex Veitia banned from penny stocks
2005-03-04 20:30 ET - Street Wire
Also Street Wire (C-*SEC) Securities and Exchange Commission
by Stockwatch Business Reporter
The U.S. Securities and Exchange Commission has won an uncontested penny stock ban against Roberto E. Veitia, once president of former Vancouver Stock Exchange listing Stratcomm Media Ltd. The SEC, in an administrative case, said 56-year-old Mr. Veitia touted then secretly sold 15 junior companies (a practice known as scalping) using Stratcomm and its subsidiaries.
Mr. Veitia's scalping fine
The current administrative action covers the same events that led to the SEC winning a $45.7-million fine against Mr. Veitia and Stratcomm in 2003 (all figures are in U.S. dollars). The fine in that 3-1/2-year civil action is believed to be the largest scalping judgment ever handed down in the United States.
The SEC said Mr. Veitia, who lived in Florida, used Stratcomm subsidiary Corporate Relations Group Inc. to tout at least 15 junior companies. To pay for the touting, the SEC said the often cash-strapped companies paid Corporate Relations Group (referred to as CRG) with shares, either for free or at a substantial discount.
(The SEC identified some of the Veitia-touted companies in its 73-page complaint: Australian-based Atlas Pacific Ltd., Florida-based ECO2 Inc., New York-based Global Intellicom Inc., Pennsylvania-based Global Spill Management Inc., Utah-based Golf Ventures Inc., New York-based Jreck Subs Inc., Florida-based Sobik's Subs Inc., Florida-based Vector Aeromotive Corp. and Florida-based Viking Management Group Inc.)
The SEC, in its complaint, said once Mr. Veitia and his companies had the shares, they began touting and profiting. "They then touted these securities to the public in CRG publications and ordered employees to promote the stocks to brokers, some of whom were bribed to sell the securities to their customers. CRG, sometimes by and through other defendants, then sold the securities at a profit while promoting them to the public," stated the complaint.
Mr. Veitia, in response to the complaint, denied all of the SEC's allegations.
However, Judge John Antoon, of the U.S. District Court for the Middle District of Florida, agreed with the SEC. He imposed fines of $25.5-million jointly on Mr. Veitia and his companies. Judge Antoon, in his May 13, 2003, judgment, also ordered Mr. Veitia and his companies to pay $19.2-million in interest. This was in addition to a $1.4-million civil penalty Judge Antoon imposed on Mr. Veitia.
Mr. Veitia and his companies appealed Judge Antoon's judgment on June 27, 2003. However, the United States Court of Appeal for the Eleventh Circuit rejected the appeal and affirmed Judge Antoon's judgment on April 29, 2004.
The penny stock ban
In a brief decision, Administrative Law Judge Lillian A. McEwen granted the SEC's request to permanently ban Mr. Veitia from penny stocks.
Judge McEwen said the shares of at least one of the companies Mr. Veitia touted, Tracker Corporation of America, classified as a penny stock.
The permanent ban is a default judgment in favour of the SEC. Judge McEwen says Mr. Veitia failed to attend a prehearing conference on Jan. 18, 2005, and he failed to answer the SEC's complaint.
On Jan. 31, 2005, Judge McEwen reminded Mr. Veitia of his obligation to respond to the SEC's complaint, however, Mr. Veitia still did not reply. In conclusion to her judgment, she said, "I find that it is appropriate and in the public interest to bar Veitia from participating in an offering of penny stock."
Mr. Veitia's silence is a stark contrast with his earlier comments. When the SEC first launched its scalping prosecution against Mr. Veitia, he said, "We applaud the SEC's efforts to clean up the seamier side of the investor relations industry; however, in this case, we believe they are aimed at the wrong target."
Stratcomm, which was delisted by the VSE in 1998, last traded on March 2, 2005, on the pink sheets for four-100ths of a penny. According to the pink sheets website, Stratcomm is more or less defunct. "Investors are advised that Pink Sheets has not been able to contact this issuer," the site states. |
