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Concorde America in settlement talks with SEC
Boca company ‘had nothing to do with’ pump and dump scheme, says CEO
Published Thursday, March 17, 2005 1:00 am
by By Sean Salai
A Boca Raton businessman accused of helping two stock promoters run a shell company out of his home said this week that he was in settlement talks with the Securities and Exchange Commission to clear the name of Concorde America Inc.
Company head Hartley Lord said he was running a legitimate start-up corporation out of his home in gated Boca Grove Plantation, just east of the Florida Turnpike, before stock promoters Donald E. Oehmke and Bryan Kos bought controlling interests in the company and started trading phony stocks.
“They used company trucks to promote their scheme, but we had nothing to do with it,” Lord told the Boca Raton News. “I fully expect my name to be dropped from the case.”
Although the SEC froze the assets of Oehmke and Kos in a Feb. 16 action, Lord said the company’s assets as a whole were never frozen.
In a scheme known to Wall Street insiders as “pump and dump,” Oehmke and Kos sold unlisted stocks from Concorde America and Absolute Health and Fitness Inc. of North Carolina last year. They used a series of phony analyst reports, press releases and spam e-mails to dupe investors.
When Concorde’s stock jumped from $3 to $8.90 a share, the two promoters quickly dumped their shares – pocketing $11.3 million and depressing the price to $2.51.
February’s SEC enforcement action against the two men and the two companies was part of a new effort to crack down on micro-cap fraud and small-time promoters, according to Business Week.
There is also an April 2004 proposal still pending before the federal agency to tighten the rules on shell company registration, SEC spokesman John Heine told the Boca News.
“We are engaged in an ongoing effort to watch penny stock fraud,” Heine said. “I can’t say at this point whether the new rules will pass.”
Christopher Byron, New York Post financial columnist and a longtime SEC critic, said he wasn’t surprised about the settlement talks with Lord.
“Most SEC lawsuits end in settlement talks and consent decrees, where the defendant effectively gets off the hook with a slap-on-the-wrist fine,” Byron said. “The deterrent effect of an SEC action just doesn’t exist anymore.”
Byron has been one of the loudest voices in recent years calling on the federal government to dismantle the SEC and replace it with a new agency.
“The SEC has the power to enforce these things and it basically doesn’t,” Byron said. They don’t get out in front of these things and they’re not very proactive.”
Sean Salai can be reached at ssalai@bocanews.com or 561-893-6427. |
