U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20791 / October 24, 2008
Securities and Exchange Commission v. Alliance Transcription Services, Inc., et al., No. CV-08-01464-PHX-NVW (D. Ariz.)
Court Enters Judgment by Default Against Alliance Transcription Services, Inc. (Formerly Known as Strategy X, Inc.) in Fraudulent Scheme to Manipulate Stock Price and Evade Registration Requirements
The Securities and Exchange Commission announced that on October 23, 2008, the United States District Court for the District of Arizona entered a final judgment by default against Alliance Transcription Services, Inc., a Nevada corporation formerly known as Strategy X, Inc. The final judgment enjoins Alliance from future violations of Section 5 of the Securities Act of 1933 (securities registration provisions) and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder (antifraud provisions).
The Commission’s complaint, filed on August 8, 2008, charges Alliance and others in connection with a scheme to manipulate Alliance’s stock price and trading volume through false and misleading public disclosures and to issue and sell Alliance’s common stock in an unregistered distribution. According to the Commission’s complaint, Alliance’s press releases made false and misleading claims about the company’s contracts and revenues and were published through business newswire services and on Alliance’s website from at least April 2005 through at least September 2006. The Commission’s complaint further alleges that, from July 2005 to September 2006, Alliance and other defendants participated in an unregistered distribution of Alliance securities through a series of purported stock offerings by Alliance to North American Funding, Inc. (“NAF”), a Texas corporation. According to the complaint, several of the defendants arranged for Alliance to issue stock to NAF in offerings that purportedly were exempt from registration but that were, in fact, not exempt and the transactions were merely a device to evade the registration provisions of the federal securities laws. The complaint alleges that the stock was immediately distributed to third parties and sold into the market, without being paid for by NAF.
Simultaneous with the filing of its complaint, the Commission settled charges against William D. O’Neal of Fountain Hills, Arizona, an attorney who allegedly issued a series of legal opinions that enabled Alliance to illegally issue purportedly unrestricted shares of its stock in unregistered transactions. The litigation is continuing against the remaining defendants, Clifford A. Lewis of Huntsville, Alabama; Richard A. Dabney of Rancho Palos Verdes, California; Raymond C. Dabney of Vancouver, British Columbia; Philip M. Young of Phoenix, Arizona; and Charles J. Smith of Reno, Nevada.
The Commission previously issued an Order on October 4, 2007 suspending trading in the securities of Alliance.
For further information, see Litigation Release No. 19870 (October 16, 2006) [subpoena enforcement action], Securities Exchange Act Release No. 56610 (October 4, 2007) [order suspending trading in Alliance securities], and Litigation Release No. 20676 (August 8, 2008) [filing of civil injunctive action].