Litigation Release No. 17795 / October 22, 2002
SEC Alleges Fraud Against Aventura, Florida Public Company in Connection with False SEC Filings and Against Its Transfer Agent for Violations of the Federal Securities Laws
Securities and Exchange Commission v. Florida Stock Transfer, Inc., Vector Holdings Corp., and Allen E. Weintraub, Case No. 02-23048-CIV-Ungaro-Benages (S.D. Fla., filed October 15, 2002).
The Securities and Exchange Commission (SEC) announced that on October 15, 2002 it filed a federal civil action (action) against Florida Stock Transfer, Inc. (FST), Vector Holdings Corp. (Vector), and Allen E. Weintraub, president of both FST and Vector, in connection with alleged violations by FST of the transfer agent rules under the federal securities laws and alleged false filings with the SEC by Vector. The action asked for emergency relief against FST and Weintraub. On October 16, 2002, the Honorable Patricia Seitz, United States District Judge for the Southern District of Florida entered, among other things, a temporary restraining order against FST and Weintraub and an asset freeze against Weintraub.
According to the SEC's complaint (complaint), Vector's transfer agent, FST, which is under the exclusive control of Weintraub, has engaged in violations of the transfer agent rules under the federal securities laws. The complaint alleges, among other things that FST did not produce all documents requested by SEC examiners during an examination of FST, did not create and maintain a daily log, and kept an incomplete and inaccurate master securityholder file for Vector. Further, the complaint alleges that since Weintraub gained control of Vector, its filings with the SEC have failed to disclose one or more of the following: (1) In 1992, Weintraub pled guilty in Broward County, Florida to five felonies: one count of organized fraud and four counts of grand theft; (2) In 1998, Weintraub pled nolo contendere in Miami-Dade County, Florida to four felony counts for fraudulent practices; (3) Also in 1998, a civil judgment was entered against Weintraub in the amount of $22,897.36, which remains unsatisfied; and (4) In 2000, a civil judgment was entered against Weintraub in the amount of $33,549.62 which also remains unsatisfied. The complaint also alleges that Vector misrepresented Weintraub's background in its annual report for the year ended December 31, 2001 which was later also incorporated by reference into a Form S-8 registration statement. The complaint further alleges Weintraub has profited from Vector's misrepresentations and omissions by dumping millions of Vector shares into the public market for a profit of well over $200,000.
As a result, the SEC's complaint charges FST with violations of Sections 17(a)(1), 17(a)(3), 17A(c), 17A(d)(1) and 17(f)(2) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 17Ac2-1, 17Ad-6, 17Ad-7, 17Ad-10, 17Ad-11, 17Ad-12, 17Ad-15, 17Ad-16, 17Ad-17, and 17f-2 thereunder, and charges Weintraub with aiding and abetting those violations. The SEC's complaint further charges Vector and Weintraub with violations of 17(a) of the Securities Act of 1933 (Securities Act), Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Weintraub with violations of Rule 13b2-2; Vector with violations of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11 and 13a-13 thereunder, and Weintraub with aiding and abetting Vector's violations of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11 and 13a-13 thereunder. The SEC is also seeking in this lawsuit preliminary and permanent injunctions against FST, Vector and Weintraub, disgorgement of ill-gotten profits from Weintraub, civil money penalties against FST and Weintraub and an officer and director bar against Weintraub.