U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22839 / October 10, 2013
Securities and Exchange Commission v. Jason Wynn and Martin Cantu, Civil Action No. 3:13-cr-00347-K (N.D. Tex.)
Two Penny Stock Promoters Indicted for Securities Fraud Following the SEC's Investigation of ConnectAJet.Com, Inc.
On September 11, 2013, the United States Attorney for the Northern District of Texas obtained a Grand Jury indictment against Jason Wynn and Martin Cantu for their role in a conspiracy to defraud prospective investors in a penny stock company that they controlled, ConnectAJet.com, Inc. ("ConnectAJet"). The indictment was unsealed on September 19. According to ConnectAJet's press releases, ConnectAJet was developing a first-of-its-kind online booking system for private jet charters. The indictment alleges that â" to artificially boost demand for ConnectAJet stock â" Wynn and Cantu issued several false public statements and advertisements that misled potential investors about (1) the progress and status of the company's real-time booking system, (2) ConnectAJet's relationships with other companies in the private jet industry, and (3) ConnectAJet's customer base. Based on that conduct, the indictment charges Wynn and Cantu with Conspiracy to Commit Securities Fraud in violation of Sections 10(b) and 32 of the Securities Exchange Act of 1934 (the "Exchange Act") and Aiding and Abetting Securities Fraud under those two provisions.
The allegations in the criminal indictment stem from the same misconduct underlying the Securities and Exchange Commission's (the "Commission's") prior investigation of ConnectAJet and the Commission's prior civil enforcement actions against Wynn and Cantu. On March 13, 2008, the Commission sued Jason Wynn and others for their role in a series of illegal, unregistered stock offerings in several penny stock companies, including ConnectAJet. SEC v. Reynolds, et al., Case No. 3:08-cv-00438-B (N.D. Tex.). In its Complaint, the Commission alleged that Wynn repeatedly engaged in a "pump and dump" of ConnectAJet and other companies. The Complaint alleged that for each company, Wynn and his fellow penny stock promoters (a) organized a reverse merger of the company into a public shell, (b) purchased large blocks of the company's stock at pennies per share in a bogus unregistered private offering, (c) created initial trading volume for the stock by selling some shares to a tightly controlled group of friends and family members, (d) touted the stock through spam e-mail, sham internet sites, and millions of direct mail advertisements, and then (e) dumped their shares on the investing public without the protection of registration at prices grossly inflated by their promotional activity. On October 13, 2011, the Court entered partial judgment against Jason Wynn based on his consent and ordered that Wynn be permanently enjoined from further violations of the antifraud and registration provisions of federal securities law and be permanently barred from participating in any offerings of penny stock. On July 11, 2013, the Court further ordered that Wynn and his corporate proxies pay $8,778,887 in disgorgement and prejudgment interest and $1,300,000 in civil penalties.
On September 2009, the Commission separately sued Martin T. Cantu and others in SEC v. ConnectAJet.com, Inc. et al., Case No. 3:09-cv-01742-B (N.D. Tex.). The Commission alleged that Cantu participated in the scheme to "pump and dump" ConnectAJet stock and issued several false press releases and advertisements to further the scheme. On July 23, 2010, the Commission obtained a judgment against Cantu that (a) enjoined him from further violations of the antifraud and registration provisions of federal securities law, (b) permanently barred him from serving as an officer and director of a public company, (c) permanently barred him from participating in a penny stock offering, (d) required him to pay $632,327 in disgorgement and prejudgment interest, and (e) required him to pay a civil penalty of $260,000.
For further information, please see Litigation Release Numbers 20496 (March 14, 2008), 20838 (December 23, 2008), 21220 (September 23, 2009), 21803 (January 11, 2011), 22128 (October 18, 2011), 22155 (November 15, 2011).