U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21368 / January 11, 2010
Securities and Exchange Commission v. Ryan M. Reynolds, Desmond J. Milligan, Jason W. Brola, Timothy T. Page, Market 99 Ltd., f/k/a eCarfly, Inc., Tryst Capital Group, LLC, Griffdom Enterprises, Inc., Testre, L.P. and Bellatalia, L.P., 3:08-CV-1687-M (N.D. Texas)
On December 22, 2009, the United States District Court for the Northern District of Texas entered judgments by default against defendants Desmond J. Milligan, Jason W. Brola, Market 99 Ltd. formerly known as eCarfly, Inc., Tryst Capital Group, LLC formerly of Dallas, Texas and Griffdom Enterprises, Inc., a Texas corporation operating from Malibu, California. The district court enjoined Milligan, Brola, Market 99 Ltd, and Tryst Capital from violating the anti-fraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933. It also enjoined Griffdom Enterprises from violating these same provisions and from acting as an unregistered broker-dealer in violation of Section 15(a) of the Exchange Act. The court also ordered Market 99 Ltd. to pay disgorgement and prejudgment interest totaling $658,463 and Milligan to be jointly liable with Market 99 Ltd for $197,029 of the principal amount plus payment of $24,743 in prejudgment interest. The court ordered Market 99 Ltd and Milligan to each pay third-tier civil penalty of $120,000. The court ordered Brola and Tryst Capital jointly to pay disgorgement and prejudgment interest totaling $1,480,484, and jointly to pay a third-tier civil penalty of $120,000. The court ordered Griffdom Enterprise to pay disgorgement and prejudgment interest totaling $2,007,649, and a third-tier civil penalty of $120,000. The court also barred Milligan and Brola from acting as officers or directors of public companies. The court also permanently barred these defendants from participating in the offering of penny stocks.
In its complaint, the Securities and Exchange Commission alleged that Brola sought to create a publicly-trading company which would sell used automobiles over the Internet and raise funds to operate by selling its shares to investors. Milligan became president and CEO of the shell corporation and changed its name to eCarfly, Inc. Milligan subsequently caused eCarfly to issue shares to the defendants, who sold them to the public when no registration statement was in effect for their sales. To create public demand for its stock, eCarfly issued numerous false and misleading press releases about its business operations, which were drafted and distributed by Milligan and Brola. The complaint alleged that, among other things, the press releases falsely claimed that eCarfly had partnerships with major national automobile dealers, that it was operating an internet automobile sales business, that it had substantial expertise in the automotive industry, and that it was opening a finance division. The press releases also allegedly made projections concerning eCarfly's revenues and the price for its stock, which lacked any reasonable basis.
The Commission's claims against the remaining defendants, Ryan M. Reynolds, Timothy P. Page, Testre, L.P. and Bellatalia, L.P. have not been resolved. No trial date has been set. For more information see Lit. Rel. No. 20742 (Sept. 25, 2008).