Rufus Paul Harris of Adairsville, along with Darryl Horton of Okemos, Michigan, and Benjamin Stanley of Kennesaw were indicted in September. Horton was arrested on Oct. 17 and Stanley and Harris surrendered today.
Adairsville man, 2 others make first appearance on charges they defrauded investors
November 3, 2009
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An Adairsville man was one of three who made their first court apperance today before a United States Magistrate Judge, indicted on charges of securities fraud and conspiracy in connection with a scheme to defraud investors of Conversion Solutions Holdings Corporation.
Rufus Paul Harris of Adairsville, along with Darryl Horton of Okemos, Michigan, and Benjamin Stanley of Kennesaw were indicted in September. Horton was arrested on Oct. 17 and Stanley and Harris surrendered today.
According to Acting United States Attorney Sally Quillian Yates, the charges and other information presented in court:
Harris was the founder and CEO of Conversion Solutions Holdings Corporation, Stanley was the co-founder and COO and Horton was the CFO. The indictment alleges that they issued false press releases and financial statements about the company to inflate the stock price, while at the same time secretly transferring their own shares to family members who sold at the inflated prices.
In at least one of the press releases, Harris was quoted as stating that, based on CSHC’s acquisition of large quantities of sovereign debt, “we are looking at a new justifiable reorganization release price of $25.63 [per share].” At the time, CSHC shares generally traded at less than approximately $1 per share.
The indictment alleges that the three defendants knew these public statements were untrue, and that they knew that CSHC had little if any assets of any value and did not own or control the foreign sovereign bonds and other assets that it claimed to have. CSHC also had little if any in the way of revenue or profits from any business activity.
During the weeks that the alleged misrepresentations were being publicly disseminated via press releases and SEC filings, CSHC’s stock price on the open market more than tripled. The stock, which was a “penny-stock” trading for less than $1 per share in August 2006, appreciated to more than $3 per share in October 2006. During this time, Harris, Stanley and Horton allegedly transferred substantial quantities of CSHC stock to family members and others, who sold the stock in the open market at artificially inflated prices of between $2-$3 per share.
The indictment charges Harris, Horton and Stanley with one count of conspiracy to commit securities fraud and one count of securities fraud each. Harris is also charged with one count of providing a false certification of a financial statement.
The securities fraud charges carry a maximum sentence of 25 years in prison and a fine of up to $250,000. The false certification of a financial statement charge carries a maximum sentence of 10 years in prison and a fine of up to $1,000,000.
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