U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20049 / March 20, 2007
SEC v. Cyberkey Solutions, Inc. and James E. Plant, Civ. Action No. 07 1084 (CMR) (E.D. Pa)
SEC Charges That Company and CEO Promoted Stock With Phony Homeland Security Deal
The Securities and Exchange Commission ("Commission") today announced the filing of a civil injunctive action alleging that a Utah-based corporation and its Chief Executive Officer made at least $1.5 million selling shares while disseminating false claims of a lucrative purchase order from the Department of Homeland Security.
In its complaint, filed today in the United States District Court for the Eastern District of Pennsylvania, the Commission alleged that CyberKey Solutions, Inc. of St. George, Utah ("CyberKey") and its CEO James E. Plant ("Plant," collectively, the "Defendants"), between November 2005 and the present, have engaged in an ongoing unregistered offering of Cyberkey shares, promoted with a series of false press releases describing a putative purchase order worth in excess of $24 million from the U.S. Department of Homeland Security ("DHS") to buy CyberKey's flash memory drives. In fact, the Commission's complaint alleges, CyberKey had no business relationship at all, either directly or indirectly, with DHS. Additionally, according to the complaint, CyberKey and Plant made other false statements to unsuspecting investors, including statements claiming CyberKey had shipped products to DHS and received payments pursuant to the phony purchase order, and that CyberKey was in the process of preparing and releasing audited financials.
The Commission's complaint further alleges, that, as a result of their scheme, the Defendants violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and seeks as relief permanent injunctions against future violations of these provisions by the Defendants, and disgorgement of all the Defendants' ill-gotten gains, including prejudgment interest and civil penalties.
In a related criminal action, Plant was arrested on March 13, 2007, in St. George, Utah, by agents of the Federal Bureau of Investigation's Philadelphia Economic Crimes Squad on charges of securities fraud and aiding and abetting securities fraud.
The Commission acknowledges the assistance and cooperation of the Federal Bureau of Investigation, the United States Attorney's Office for the Eastern District of Pennsylvania and the National Association of Securities Dealers in the investigation of this matter.