U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21080 / June 11, 2009
SEC v. Forest Resources Management Corp., et al., Civil Action 09 Civ. 903 (JSR) (SDNY)
Court Permanently Enjoins Forest Resources Management Corp. and Chaim Justman in Fraudulent Sale of Securities
The Securities and Exchange Commission announced that on April 14, 2009 the United States District Court for the Southern District of New York entered a final judgment on default against defendant Forest Resources Management Corp., of New York, New York, in an action filed in February by the Commission. The final judgment entered by Hon. Jed S. Rakoff permanently enjoins Forest from further violations of Sections 5(a) and 5(c) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
The Commission further announced that on April 29, 2009 the Court entered a partial consent judgment against defendant Chaim Justman, of Brooklyn, New York Without admitting or denying the allegations of the Commission's complaint, Justman consented to the entry of judgment that permanently enjoins him from further violations of Sections 5(a) and 5(c) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The judgment provides that Justman will disgorge his ill-gotten gains and prejudgment interest and pay a civil penalty in amounts to be determined by the Court.
The Commission's complaint alleges that Forest, Justman, and others made material misrepresentations to Forest's transfer agent in order to obtain millions of restricted shares without the required restricted legend. A registration statement was never in effect for the shares issued to Justman and his nominees. Justman and his nominees then sold these unlegended shares on the open market, falsely holding them out to the investing public as free-trading shares, when in fact they were restricted stock. Justman received more than $110,000 from the improper sale of these shares.
The litigation is continuing against the remaining defendant.