U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19635 / March 31, 2006
SEC v. 2DoTrade, Inc., George Russell Taylor, Barry William Gewin aka Barry Peters, Eric T. Landis, Dominic Roelandt, Michael D. Karsch, L. Van Stillman, David A. Wood, Jr., Clinton Walker, Oxford and Hayes, Ltd., FG & P Consulting, Ltd. Hackney Holdings, Ltd., Weston Partners, Inc., Infiniti Corporate Services, Ltd., Argo Financial, Ltd., 21st Equity Partners, Inc., MCG Partners, Inc., and LMR, Ltd., Civil Action No. 03-CV-2246-N, United States District Court for the Northern District of Texas, Dallas Division
The Securities and Exchange Commission announced that on March 29, 2006, the Honorable David Godbey, United States District Judge for the Northern District of Texas, entered a Final Judgment against Defendant Michael D. Karsch, enjoining him from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Karsch consented to the entry of the judgment without admitting or denying the allegations in the Commission's Complaint. The court ordered Karsch to pay disgorgement of $2,721, representing profits gained as a result of the alleged fraudulent conduct, prejudgment interest of $238, a civil penalty of $20,000, and permanently barred Karsch from participating in an offering of penny stock, including engaging in activities with a broker, dealer or issuer for purposes of issuing, trading or inducing the purchase or sale of any penny stock.
The Commission's complaint alleged that the defendants engaged in a "pump and dump" scheme designed to inflate 2DoTrade's stock price. Between at least June and November 2001, the defendants issued materially false and misleading press releases claiming that 2DoTrade had entered into several large international trading contracts and had developed an anti-anthrax compound. During the same period, the defendants sold shares of 2DoTrade stock for illegal trading profits of at least $1.8 million. The complaint alleged further that Karsch assisted the defendants in financing the scheme, and that MCG Partners, Inc., of which Karsch was a director, sold shares of 2DoTrade for illegal trading profits.