U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20665 / July 31, 2008
Securities and Exchange Commission v. Robert L. Sonfield, Donald C. Bradley, Jeffrey W. Bradley, Jason Landess, Marc Lane and Roger Brewer, Defendants, and Alexanderia K. Blankenship, Relief Defendant, Civil Action No. 4:08-cv-02351, (S.D. Texas, Houston Division) (July 29, 2008)
SEC Action Alleges Registration and Anti-Fraud Violations by Six Individudals
On July 29, 2008, the United States Securities and Exchange Commission filed a civil injunctive action in United States District Court for the Southern District of Texas, Houston Division, alleging that six individuals, including a Houston, Texas attorney and a Las Vegas, Nevada attorney, violated various provisions of the federal securities laws in their unregistered, nonexempt distribution of more than 10.8 million shares of the common stock of a Houston, Texas software development company. The complaint further alleges that the six individuals, and one relief defendant, collectively reaped proceeds exceeding $3.91 million from their illegal scheme.
Named in the Commission's complaint are:
The Commission's complaint alleges that in the summer of 2005, Landess, Don Bradley and Don Bradley's son Jeffrey Bradley conveyed control of a Nevada corporate shell to Sonfield. The complaint further alleges that Sonfield caused the shell to issue several unpaid, backdated stock certificates, in order to make false claims that the shares qualified for sale under certain exemptions to the registration provisions of the federal securities laws.
In September 2005, according to the complaint, Sonfield, Lane and Brewer merged the shell with a privately held corporation engaged in the development of computer security software. Following the merger, Sonfield, Lane and Brewer controlled virtually all of the supposed "free trading," public "float" of the common stock of the surviving software corporation, Exobox Technologies Corp., which is based in Houston, Texas. From approximately late 2005 through at least April 2007, according to the complaint, Sonfield, Lane, Brewer, Landess, Jeff Bradley and Don Bradley transferred and sold the vast majority of the shares into the public market through over the counter sales for collective proceeds of $3.91 million. Of those total proceeds, the complaint further alleges that relief defendant Blankenship received $600,000, as the result of her personal relationship with Sonfield.
The complaint also alleges that Sonfield prepared various filings with the Commission for Exobox, which omitted the material fact that he, Lane and Brewer controlled almost all of Exobox's public float. The complaint alleges that because of these material omissions, Sonfield (but not Exobox or its officers and directors) violated the anti-fraud provisions of the federal securities laws and aided and abetted violations of the reporting provisions of the federal securities laws.
The complaint alleges that all the defendants (except the relief defendant)violated Sections 5(a) and (c) of the Securities Act of 1933, that Sonfield also violated Sections 10(b) and 16(a) of the Securities Exchange Act of 1934 and Rules 10b-5 and 16a-3 thereunder and that he aided and abetted violations of Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-1 thereunder, and that Lane and Brewer also violated Section 13(d) and 16(a) of the Exchange Act and Rules 13d-1 and 16a-3 thereunder.
The Commission is seeking injunctive relief against future violations of these provisions by the respective defendants, civil money penalties, penny stock bars, and disgorgement with pre-judgment interest of any ill-gotten gains. The Commission further seeks an order requiring that relief defendant Blankenship disgorge any ill-gotten proceeds she received.