Litigation Release No. 22165 / November 22, 2011
Securities and Exchange Commission v. David Ronald Allen, et al., Civil Action No. 3:11-CV-882 –O (N.D. Tex.)
SEC OBTAINS JUDGMENTS AGAINST FORMER CEO OF CHINA VOICE HOLDING CORP.
On November 22, 2011, the Securities and Exchange Commission announced that the Honorable Reed O’Connor, United States District Judge for the Northern District of Texas, entered a Final Judgment against William F. Burbank, IV, the former Chief Executive Officer and President of China Voice Holding Corp. to settle charges that he made false and misleading statements and material omissions regarding China Voice and selectively disclosed material, non-public information regarding the company.
Without admitting or denying the allegations in the SEC’s complaint, Burbank agreed to entry of a Final Judgment permanently enjoining him from violating Section 17(a) of the Securities Act of 1933, 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder and from aiding and abetting violations of Section 13(a) of the Exchange Act and Regulation FD thereunder. The Final Judgment, entered on November 21, also orders Burbank to pay $60,333 in disgorgement and prejudgment interest and a civil penalty of $60,000. In addition, Burbank is barred from ten years from serving as an officer or director of a public company and from participating in an offering of a penny stock.
The Commission filed an emergency action on April 28, 2011, alleging that China Voice’s co-founder and former Chief Financial Officer, David Ronald Allen, with the assistance of Alex Dowlatshahi and Christopher Mills, and numerous related entities, launched what became a Ponzi scheme that sought to raise at least $8.6 million from investors across the country. The Commission alleged that, contrary to what investors were told, proceeds were used to pay back earlier investors; to make payments to Allen, Dowlatshahi, and Mills; and to make payments to Allen-affiliated business, including China Voice. The Commission’s complaint alleged that Burbank also received ill-gotten gains from this Ponzi scheme. The SEC’s complaint further charged Burbank and Allen for a series of fraudulent statements about China Voice’s financial condition and business prospects and with selectively disclosing material, non-public information regarding the company to certain shareholders. In addition, the SEC charged China Voice shareholders Ilya Drapkin and Gerald Patera with financing stock promotion campaigns regarding China Voice, including a blast fax campaign conducted by Robert Wilson.
The Commission’s case is still pending against remaining defendants China Voice, Allen, Wilson, and various of their related entities.