Securities and Exchange Commission
Litigation Release No. 17469 / April 11, 2002
Securities and Exchange Commission v. Surgilight, Inc., Jui-Teng Lin, Yuchin Lin and Aaron Tsai, Civil Action No. 6:02-CV-431-0RL-18KRS (G. Kendall Sharp, J.; Karla R. Spaulding, M.J.) (M.D. Fla. filed April 11, 2002)
SEC Sues Laser Eye Surgery Company, Two Securities Law Recidivists and Others In Multi-Million Dollar Stock Manipulation
The Securities and Exchange Commission ("Commission") today filed a civil action against a laser eye surgery company, two securities law recidivists, and a shell company broker in a multi-million dollar stock manipulation involving Surgilight, Inc., a publicly traded company headquartered in Orlando, Florida. One defendant, Dr. Jui-Teng Lin, was also indicted today by the United States Attorney's Office for the Eastern District of New York on related criminal charges.
The Commission's complaint, filed in the United States District Court for the Middle District of Florida, alleges that Dr. Lin and his wife, Yuchin Lin, reaped over $1,700,000 in ill-gotten gains from manipulating the common stock of Surgilight. According to the complaint, the Lins artificially inflated the market price of Surgilight stock tenfold (from approximately $2.50 to over $25 per share) through a series of false and misleading press releases issued by Surgilight. The press releases detailed the company's purported ability to cure age-induced vision deterioration known as "Presbyopia." The Lins simultaneously dumped a substantial amount of Surgilight stock on an unsuspecting public through two nominee accounts and moved the proceeds through a series of offshore accounts to a domestic bank account held in Surgilight's name that they controlled. The Lins settled a prior civil action brought by the Commission involving another laser eye surgery company in September 1998 [see SEC v. Jui-Teng Lin and Yuchin Lin, Litigation Release No. 15870 (Sept. 3, 1998)].
The Commission further alleges that the Lins were assisted by Aaron Tsai of Henderson, Kentucky. According to the complaint, Tsai sold the Lins the publicly traded shell that became Surgilight, supplied the stock that was dumped out of the nominee accounts and, after Surgilight became a publicly-held entity, remained with the company as a consultant. At the height of the manipulation, Tsai sold over $1,000,000 worth of Surgilight stock for his own account.
The Commission charges Dr. Lin with violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 ("Securities Act") and Sections 10(b), 13(d), and 16(a) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5, 13d-1, 13d-2, 16a-2, and 16a-3 thereunder. Ms. Lin and Surgilight are charged with violations of Sections 5(a), 5(c), and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Tsai is charged with violations of Sections 5(a) and 5(c) of the Securities Act and aiding and abetting Dr. Lin and Ms. Lin's violations of Section 10(b) of the Exchange Act and Rules 10b-5 thereunder. The Commission seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties from all defendants and an officer and director bar against Dr. Lin.
The Commission acknowledges assistance provided by NASD Regulation Inc. and the United States Attorney's Office for the Eastern District of New York in this matter.
For tips on how to avoid Internet "pump-and-dump" stock manipulation schemes, visit http://www.sec.gov/investor/online/pump.htm. For more information about Internet fraud, visit http://www.sec.gov/divisions/enforce/internetenforce.htm. To report suspicious activity involving possible Internet fraud, visit http://www.sec.gov/complaint.shtml.