On April 2, 2004, the SEC filed suit against LASV Enterprises, Inc., a former OTC Bulletin Board company based in British Columbia, Canada, its undisclosed controlling shareholder, Robert S. Zaba, 47, also of British Columbia, its former president, Robert B. Abbott, 57, a resident of Quebec Canada, and California attorney, Warren J. Soloski, 62, for violations of the anti-fraud, securities registration, periodic and current reporting, and beneficial ownership reporting provisions of the federal securities laws. LASV and Abbott have consented to the entry of permanent injunctions and Abbott has agreed to be barred from serving as an officer-and-director and from participating in a penny-stock offering. These settlements await Court approval.
According to the SEC's complaint, Zaba, Abbott, and Soloski participated in a fraudulent scheme as follows:
In March and April 2000, Zaba secretly acquired control of LASV, a public shell company, and orchestrated a reverse merger with a no-asset, private British Columbia company that he controlled. Between May 2000 and July 2001, Zaba caused LASV to issue a series of false and misleading press releases designed to artificially increase the price of the company's stock. Among other things, the press releases announced that LASV had acquired a multi-million-dollar casino resort in the Dominican Republic, that it had obtained funding to acquire a multi-million-dollar airline, and that it would profit billions from the operation of a Russian national lottery. In truth, LASV never came close to completing these transactions. Several of these misleading statements were also contained in LASV's Commission filings, which also failed to disclose, as required, Zaba's control of the company.
Abbott served as LASV's strawman president. At Zaba's direction he signed fraudulent Commission filings, served as a nominee shareholder, and authorized the issuance of millions of LASV shares for Zaba's benefit.
Soloski prepared LASV's misleading quarterly, annual, and current SEC reports. He also prepared 11 fraudulent Form S-8 registration statements that registered offerings of approximately 16.2 million LASV shares to purported independent consultants. In reality, the consultants were Zaba nominees, who performed no consulting services for LASV. In fact, Soloski and Zaba received the bulk of the Form S-8 shares and sold or distributed them into the inflated market.
In total, Zaba and Soloski received a financial benefit in excess of $2.3 million from the unlawful sale and distribution of LASV shares.
Based on the alleged misconduct, the complaint charges that:
LASV, Zaba, Abbott and Soloski violated the securities-registration and anti-fraud, provisions of the federal securities laws, specifically, Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
LASV, aided and abetted by Zaba, Abbott and Soloski, violated the issuer reporting provisions found in Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder; and
Zaba additionally violated Sections 13(d) and 16(a) of the Exchange Act and Rules 13d-1, and 16a-3 thereunder, which are the beneficial-ownership and principal-shareholder reporting provisions of the federal securities laws.
The SEC seeks, among other relief, permanent injunctions, disgorgement of ill-gotten gains with pre-judgment interest, civil money penalties, and penny-stock bars against defendants Zaba and Soloski. The complaint further seeks an order barring Zaba from serving as an officer-and-director of an SEC reporting company. Defendants LASV and Abbott agreed to all of the requested injunctive relief without admitting or denying the allegations in the complaint. No civil penalty was imposed against Abbott based on his demonstrated financial inability to pay.
Further, the SEC issued an administrative order revoking the registration of LASV's securities under Section 12(j) of the Exchange Act, finding that LASV failed to comply with the aforementioned provisions of the Exchange Act. LASV agreed to the entry of the order without admitting or denying the findings therein.
