U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18957 / November 3, 2004
Securities and Exchange Commission v. Treyton L. Thomas, et al., Civil Action No. 04-12315 (PBS) (D.MA November 1, 2004).
SEC Charges Treyton L. Thomas and Pembridge Group, Ltd. With Securities Fraud and Stock Manipulation
The Securities and Exchange Commission announced that on November 1, 2004, it filed civil fraud charges against Treyton L. Thomas, a resident of Boston, Massachusetts, and a company he founded, Pembridge Group, Ltd., for engaging in a scheme to manipulate the securities of Imagis Technologies, Inc., a Canadian software company quoted on the OTC-Bulletin Board.
In a complaint filed in United States District Court in Boston the SEC alleges that from at least 1999 through 2002, Thomas generated several false press releases in which he claimed to be the chairman of Pembridge, a purported multi-faceted investment firm that managed several hundred million dollars and provided growth capital to formative companies. In fact, it is alleged, Pembridge had no such assets under management and instead was simply a front that Thomas used to gain credibility and further his fraudulent scheme. The Commission charges that, after several of the false press releases were disseminated, Thomas manipulated the stock of Imagis by causing Pembridge to propose a fraudulent cash tender offer for all of Imagis' outstanding stock. On March 6, 2002, Pembridge publicly announced the proposed tender offer with a potential offer price of over $4.00 per share (almost double the price at which Imagis' stock was trading in previous months). Pembrdige's March 6 announcement sent the price of Imagis' stock up to a 52-week high of $3.40. As alleged, neither Thomas nor Pembridge controlled or had access to hundreds of millions of dollars let alone the resources necessary to buy out Imagis' shareholders.
The SEC further alleges in the complaint that prior to announcing the false tender proposal, Thomas had arranged for an offshore entity – known as Indo Sakura Trust – to acquire over 100,000 warrants of Imagis stock. Shortly before the fraudulent March 6 tender offer announcement, Indo Sakura converted 70,000 warrants to shares and, a few days after the bogus release, Indo Sakura exercised its remaining 35,000 warrants. Pembridge also acquired warrants to purchase 50,000 shares of Imagis stock at $2.20 (CDN) a share. In addition, Thomas advised purported clients to purchase Imagis stock. The Defendants' illicit scheme artificially inflated the value of Indo Sakura's Imagis stock, as well as the securities held directly by Pembridge and its purported clients.
The SEC alleges that Thomas and Pembridge violated Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder, by their fraudulent scheme to manipulate the market in Imagis stock. The Commission further alleges that the defendants violated Section 14(e) of the Exchange Act, and Rule 14e-8 thereunder by their false and fraudulent communication of the tender offer. The relief sought in the complaint as to each of the Defendants includes permanent injunctions from further violations of the general and tender offer anti-fraud provisions of the federal securities laws, disgorgement of ill-gotten gains with prejudgement interest, civil monetary penalties, penny stock bars, and a permanent bar prohibiting Thomas from serving as an officer or director of a public company.