SEC sues lawyers, Ontario men for pump-and-dump
2007-06-15 17:59 ET - Street Wire
Also Street Wire (U-AVLL) AVL Global Inc
by Mike Caswell
The U.S. Securities and Exchange Commission has filed civil fraud charges against an Ontario father and son, Phillip Fisher, 61, and Tyler Fisher, 31, for the alleged pump-and-dump of AVL Global Inc., a Michigan-based pink sheets company.
The SEC's complaint, announced Thursday, also names former SEC enforcement lawyer Phillip Offill and Arizona lawyer David Stocker as defendants. The SEC says the two lawyers helped the Fishers dump millions of AVL Global shares without disclosing the company's failing operations.
According to the SEC's complaint, Peter Fisher and his son Tyler incorporated AVL Global on April 8, 2004, purportedly to make GPS tracking devices for cars. The company had few customers and no revenue.
Tyler Fisher was the company's president and sole director. Officially, Peter Fisher was only a consultant, but the SEC says he controlled nearly all aspects of AVL Global. In 1983, Peter Fisher pleaded guilty to a criminal charge of unlawfully acting as an underwriter and agreed to pay a $1,000 fine.
The SEC says the Fishers caused AVL to issue 15 million shares in 2004 in transactions that appeared to be legitimate arm's-length sales, but actually were a sham to evade disclosure requirements. AVL sold stock to investment companies controlled by Mr. Stocker or Mr. Offill, who allegedly prepared legal opinions that made the shares free trading.
The lawyers incorporated two private Texas companies, with the names Lake Tahoe Ski Rental Inc., and Collective Thought Holdings Inc., to make the dealings look legitimate, the SEC says. The companies bought shares in private placements, including a subscription for five million shares at one cent. (All figure are in U.S. dollars.)
Mr. Stocker transferred the shares back to Peter Fisher, who controlled approximately 90 per cent of the 15 million shares issued, according to the complaint.
In October, 2004, the SEC says the Fishers started issuing false and misleading news releases. At the same time they sold thousands of shares to the public. The stock rose to a $4.10 high on Dec. 16, 2004, declining to 38 cents by Feb. 28, 2005.
"Peter Fisher benefited from the Defendants' illegal scheme both through his sale on the open market of at least $160,000 worth of AVL Global stock from June 2004 through February 2005, and indirectly through the millions of shares of AVL Global stock that he distributed to his family and business associates," the complaint reads.
The SEC says the Fishers went to Orlando, Fla., in June or July, 2004, to meet a stock promoter who could tout AVL Global with junk faxes. The promoter (who is not identified in the complaint) started sending the faxes in December, 2004, through a Miami-based company. He received one million free trading shares for his work.
Peter Fisher also published at least four misleading news releases, the SEC says. The first, issued on Dec. 2, 2004, stated the Botswana Department of Defence was testing the company's tracking units, and suggested successful tests could result in an order of 3,000 to 5,000 units.
"This statement was false and misleading," the SEC says. "By early September, the company's distributor for Africa ... had determined that Botswana lacked satellite coverage necessary to support AVL Global tracking devices and sent the testing units back to AVL Global."
A Feb. 3, 2004, news release claimed the company had "a dramatic increase for its tracking services since the beginning of the New Year," but the SEC says the company had abandoned its tracking business in early January, 2005.
"Investors were harmed by the lack of accurate disclosure by AVL Global and by the false and misleading press releases issued by Peter Fisher and Tyler Fisher on behalf of the company," the complaint reads.
The SEC is seeking disgorgement of profits, appropriate civil penalties and penny stock bans against all four defendants, but one has already settled. Without admitting or denying the allegations, Tyler Fisher agreed to pay a $25,000 (U.S.) penalty and to a five-year ban from penny stocks.
The SEC has not proven its allegations, and the remaining defendants have not responded to the case.
Phillip Offill
Mr. Offill worked in the SEC's Forth Worth office until 1999, before he went into private practice as a securities lawyer.
One of his clients was David Whittemore, a Texas stock tout the SEC charged with wrong-number touting in a 2005 civil case. Mr. Whittemore allegedly touted Jan Olivier's Yap International Inc., a Vancouver company that went from 68 cents to $1 as Mr. Whittemore left messages on answering machines purporting to be a hot stock tip accidentally left at the wrong phone number.
Government records show Mr. Offill filed incorporation documents for Nexus Asset Holdings LLC, a company that sued a purported Vancouver-based hockey league, World Hockey Association Corp., in February.
AVL Global changed its name to China Northwest Biotech Corp. in February, 2006, and last traded at three cents. |
