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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 20730 / September 19, 2008

Securities and Exchange Commission v. Timothy M. Roberts, Case No. 06-cv-1611 T-23EAJ (M.D. Fla. filed May 16, 2006)

SEC Settles Charges With Video Game Executive

The Securities and Exchange Commission today announced that it has settled charges with Timothy M. Roberts, the former Chief Executive Officer of Seattle-based video game developer Infinium Labs, Inc. (also known as Phantom Entertainment, Inc.). As part of the settlement, Roberts agreed (without admitting or denying the Commission's allegations) to be barred from serving as an officer or director of any public company for five years, to barred from participating in any offering of penny stock for five years, and to pay a $30,000 civil penalty.

The settlement stems from a complaint filed by the Commission in May 2006 (as amended in May 2007) in federal court in the Middle District of Florida. According to the complaint, Roberts hired a stock promoter in November 2004 to send faxes to tens of thousands of potential investors across the country. The faxes made it appear as if Infinium Labs were on the verge of launching its flagship product, a home videogame system called the "Phantom." In fact, at the time of the fax campaign, Infinium Labs lacked the financial resources to overcome the significant technological and manufacturing hurdles preventing it from marketing the game system to consumers. The faxes also included baseless stock price targets, predicting that Infinium Labs' stock price would rise as much as 3,000% in the coming weeks.

The Commission alleges that, over the four months of the fax campaign, Roberts took advantage of the increased trading volume in Infinium Labs shares to sell his personal stock holdings without reporting the sales to the public. The Commission's complaint also alleges that Roberts paid the promoter with four million shares of his own Infinium Labs stock in violation of the registration provisions of the federal securities laws.

In the settlement, Roberts consented to a court order that:

  • enjoins him from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Sections 10(b) and 16(a) of the Securities Exchange Act of 1934 and Rules 10b 5 and 16a 3 thereunder;

  • prohibits him, for a period of five years, from acting as an officer or director of a publicly-held company;

  • prohibits him, for a period of five years, from participating in any offering of penny stock; and

  • orders him to pay a civil penalty of $30,000.

Litigation Release Nos. 19701 (May 16, 2006) and 19305 (Jul. 18, 2005)

 

http://www.sec.gov/litigation/litreleases/2008/lr20730.htm


Modified: 09/19/2008