U.S. Securities and Exchange Commission
Litigation Release No. 18743 / June 10, 2004
SEC v. Ives Health Co. Inc., M. Keith Ives, Michael Harrison and James Kosta, Civil Action No. 01-CV-6999 (GEL) (SDNY)
SEC SETTLES FRAUD CASE AGAINST FORMER FOUNDER AND PRESIDENT OF IVES HEALTH COMPANY
The Securities and Exchange Commission today announced that on June 2, 2004, the United States District Court for the Southern District of New York entered a final judgment enjoining M. Keith Ives, former president of Ives Health Co., for his participation in a scheme to manipulate the stock of Ives Health Co. The judgment also imposes an officer-and-director bar.
The Commission's complaint, filed in July 2001, alleged that he violated the registration, reporting and antifraud provisions of the securities laws, by among other things, promoting the stock of Ives Health on the basis of a supposed treatment for HIV, known as T-Factor. Press releases promoting Ives Health falsely claimed that the effectiveness of T-Factor had been proven in tests conducted by an immunologist, in affiliation with the World Health Organization, according to the Commission's complaint.
In a parallel criminal action, Ives was charged with securities fraud, wire fraud, and conspiracy to defraud the United States by marketing an unapproved drug. He pled guilty and was sentenced to 51 months in prison and to three years of supervised release. In addition, Ives was ordered to pay restitution of $1,252,907 million to victims of his securities fraud, and $548 to purchasers of T-Factor. United States v. M. Keith Ives, and Ives Health Co., 01 Cr. 691 (RCC) (S.D.N.Y.). Ives is currently incarcerated.
The final judgment in the Commission's action, to which Ives consented, permanently enjoins him from violating the registration, reporting and antifraud provisions of the securities laws, and permanently bars Ives from acting as an officer or director of a public company. Previously, Michael Harrison, an officer of Ives Health also named in the action, was enjoined, on consent, from violating the registration, reporting and antifraud provisions of the securities laws and ordered to pay disgorgement of $8,720, representing the proceeds from his sales of Ives Health securities, plus prejudgment interest of $727.96. In addition, a default judgment was entered against Ives Health Co., which enjoined the company from violating the registration, reporting and antifraud provisions of the securities laws. The action against Kosta continues.