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U.S. Securities and Exchange Commission

Litigation Release No. 21955 / May 4, 2011

Securities and Exchange Commission v. Allen E. Weintraub and AWMS Acquisitions, Inc., d/b/a Sterling Global Holdings, Case No.: 1:11-cv-21549-PCH (S.D.Fla. May 3, 2011)

SEC Sues Allen E. Weintraub and Sterling Global Holdings for Securities Fraud

The Securities and Exchange Commission announced today that it filed a Complaint alleging fraud and violations of a tender offer rule against AWMS Acquisition, Inc., d/b/a Sterling Global Holdings (Sterling Global), a shell company, and Allen E. Weintraub, Sterling Global’s sole owner, officer, director, and employee.

The Complaint, which was filed in U.S. District Court for the Southern District of Florida, alleges that Weintraub and Sterling Global deceived the public by making false and misleading statements regarding Sterling Global’s ability to purchase and operate two public companies–Eastman Kodak Company (Kodak) and AMR (AMR), the parent company of American Airlines. Specifically, the Complaint alleges:

  • On March 19, 2011, Weintraub, on behalf of Sterling Global, emailed a written tender offer to Kodak for all its “outstanding stock” at a total price of approximately $1.3 billion in cash. On March 29, 2011, Weintraub emailed substantially the same letter to AMR offering to purchase all AMR’s “outstanding stock” for approximately $3.25 billion in cash. These offer prices represented almost a 50% premium over each company's then current stock price.

  • In an effort to generate publicity, Weintraub emailed the purported tender offers to media outlets and financial investment research firms. In published media interviews, Weintraub boasted that he has 15 years experience buying distressed companies, that banks had agreed to finance the acquisitions, and that letters of credit could be readily provided.

  • Weintraub’s statements created the impression that Sterling Global's tender offers were legitimate and that the deals were capable of being completed; however, completion of either deal was impossible —Weintraub knew that neither he nor Sterling Global had any assets and that there were no agreements in place to finance the purported acquisitions.

  • Weintraub and Sterling Global also omitted to disclose the following material information about their backgrounds:

    • In a 2002 SEC enforcement action, SEC v. Florida Stock Transfer, Inc., et al., Lit. Rel. 17795 & 18021, the court entered a permanent injunction enjoining Weintraub from, among other things, violating Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 13(a) of the Securities Exchange Act of 1934 (“Exchange Act”). The Court also barred him from acting as an officer and director of a public company and ordered him to pay disgorgement plus prejudgment interest of $930,000 and a civil penalty of $120,000.

    • Weintraub was convicted in Florida for fraud and grand larceny in 1992, 1998, and 2008. Weintraub is on probation for his 2008 conviction.

    • Weintraub filed for personal bankruptcy in 2007 and still owes a non-dischargeable prior judgment in favor of the SEC in the amount of approximately $1,050,000.

    • In September 2010, the State of Florida’s Division of Corporations administratively dissolved Sterling Global for failure to file its required annual report.

The Complaint charges Weintraub and Sterling Global with violations of Sections 10(b) and 14(e) of the Exchange Act and Exchange Act Rules 10b-5 and 14e-8. The Commission requests that the court permanently enjoin Weintraub and Sterling Global from violating the antifraud and tender offer provisions of the federal securities laws, order them to pay disgorgement plus prejudgment interest, and impose a civil money penalty against them.

 

http://www.sec.gov/litigation/litreleases/2011/lr21955.htm


Modified: 05/04/2011