U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19318 / July 29, 2005
SEC v. Christine Favara aka Christine McKiernan aka Christine Anderson aka Christine Anderson Holzman, (U.S. District Court for the Central District of California, Civil Action No. CV 05-5486 RJK (PLAx)
SEC ALLEGES SECURITIES FRAUD AGAINST FORMER CEO OF PENNY STOCK COMPANY
On July 28, 2005, the Commission filed suit in federal court in Los Angeles charging Christine Favara, a former chief executive officer of a penny stock company, with securities fraud and other federal securities law violations relating to the issuance of false and misleading press releases and the improper registration of shares intended to be issued as compensation to employees and consultants.
The complaint alleges that Favara, also known as Christine McKiernan, Christine Anderson and Christine Anderson Holzman, while CEO of Core Solutions, Inc., caused Core Solutions to issue press releases about the company's current financial condition and its future prospects that were false and misleading. According to the complaint, in January 2003, when Core Solutions had no revenues and approximately $11,000 in assets, Favara issued press releases stating the company had generated new accounts representing over $1 million in annual revenue and projected annual revenues of $50 million to $250 million. The complaint alleged that these projections were false and misleading given that the company had no revenue or assets at the time.
In addition, the complaint alleges that Favara failed to disclose in a Form 10-KSB filed by Core Solutions that she was subject to a previous Commission injunction that arose from an insider trading matter. The complaint also alleges that Favara caused Core Solutions to improperly register and issue shares under a Form S-8 registration statement (i.e., stock that was intended to be issued in connection with an employee benefit plan), because the recipients of those shares did not qualify as proper recipients of Form S-8 shares.
The Commission alleges in its complaint that Favara violated the securities registration and antifraud provisions of the federal securities laws, 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, and aided and abetted violations of the reporting provisions, Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-1 thereunder. In its action, the Commission is seeking a permanent injunction, disgorgement, and civil penalties. In addition, the Commission is seeking to prohibit Favara from participating in a penny stock offering and from serving as an officer or director of an issuer.